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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1940477 times)
Adrian-x
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November 04, 2014, 03:16:12 AM
 #15541

It is economically naive to fail to consider that a feature that adds value in one economic condition, may subtract it in another, and that movement of money may follow this with a lag, sometimes a very significant lag due to practical constraints.
Further naivete would be in imaging that this is not happening all the time, and that this effect is commonly exploited.  "Economists" here are contemplating only static ideal cases, and implementing regulatory changes in spite of these concerns.  Changing the code is changing what ultimately regulates Bitcoin.

With this particular change, it is not so easy to undo it if it turns out to be a mistake.  Many Bitcoin may be destroyed.  People will make mistakes of trust.

There are many new risks with SC.  Lets address them rather than pretend that they don't exist.

You make many sensible comments and let me insist I am not trying to downplay the potential risks of sidechains.

My problem is that most of sidechains opponents in this thread are justifying their risk-case with a proposition that involves the creation of coins booted on sidechains.

To my knowledge, coins booted on sidechains are the economic equivalent of altcoins and in no way are sidecoins advantaged over altcoins. So in essence, sidecoins are not responsible for that problem and it is misguided to suggest that they are.

brg444, what is you critique of doing all the things you like about SC with Open-Transactions http://opentransactions.org/wiki/index.php/Main_Page, and none of the inflation?

Utility sidechains (1:1) peg have no inflation and are more decentralized than OT is.


I win?

how are those cheep coins working for you  Smiley OT can be as decentralized as using a BitTorrent client to assess the BitTorrent network, 100%  decentralized, and available without a prototypical change why so insistent SC are better?  

FYI inflation in value on a SC is what prevents one converting back into BTC, one want to use the value enabled by the SC, and if it isn't there you want to convert back the BTC.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 04, 2014, 03:21:23 AM
 #15542

you're not reading properly.  a SC with a sidecoin can also accept scBTC.  it's the scBTC that have the 2wp, as you say.  therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards.  this is why they will MM and eventually directly mine if enough scBTC appears on the SC.

I don't believe this is quite exact.

A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC.

For that reason, sidecoins are exactly like altcoins

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 03:28:29 AM
 #15543

you're not reading properly.  a SC with a sidecoin can also accept scBTC.  it's the scBTC that have the 2wp, as you say.  therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards.  this is why they will MM and eventually directly mine if enough scBTC appears on the SC.

I don't believe this is quite exact.

A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC.

For that reason, sidecoins are exactly like altcoins

the dev can design the peg and the SC with any properties he wants.  he could design the exact scenario i outline; a SC with a 1:1 peg for BTC <--> scBTC that also issues a block reward for a new sidecoin while at the same time processing scBTC and sidecoin tx for fees.

this would definitely attract MM initially, and if highly successful, defecting Bitcoin miners who direct mine the SC.
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November 04, 2014, 03:29:12 AM
 #15544

how are those cheep coins working for you  Smiley OT can be as decentralized as using a BitTorrent client to assess the BitTorrent network, 100%  decentralized, and available without a prototypical change why so insistent SC are better?  

FYI inflation in value on a SC is what prevents one converting back into BTC, one want to use the value enabled by the SC, and if it isn't there you want to convert back the BTC.

I will be honest I haven't looked into OT in much details but if I understand it right, can the same concern you guys parade around not be applied to OT as well?

If OT gains traction and develops innovative utilities then is it not right that most txs would occur on their network and would be even more dangerous for the miners than SCs?

I'm not sure I understand your last comment. Value is not inflated using utility chains working with a 1:1 peg, the ledger is preserved and no additional coins are created.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 03:31:25 AM
 #15545

you're not reading properly.  a SC with a sidecoin can also accept scBTC.  it's the scBTC that have the 2wp, as you say.  therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards.  this is why they will MM and eventually directly mine if enough scBTC appears on the SC.

I don't believe this is quite exact.

A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC.

For that reason, sidecoins are exactly like altcoins

pg 11 Complexity:

On the level of assets, we no longer have a simple “one chain, one asset” maxim; individual
chains may support arbitrarily many assets, even ones that did not exist when the chain was first
created. Each of these assets is labelled with the chain it was transferred from to ensure that their
transfers can be unwound correctly.
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November 04, 2014, 03:31:29 AM
 #15546

you're not reading properly.  a SC with a sidecoin can also accept scBTC.  it's the scBTC that have the 2wp, as you say.  therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards.  this is why they will MM and eventually directly mine if enough scBTC appears on the SC.

I don't believe this is quite exact.

A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC.

For that reason, sidecoins are exactly like altcoins

the dev can design the peg and the SC with any properties he wants.  he could design the exact scenario i outline; a SC with a 1:1 peg for BTC <--> scBTC that also issues a block reward for a new sidecoin while at the same time processing scBTC and sidecoin tx for fees.

this would definitely attract MM initially, and if highly successful, defecting Bitcoin miners who direct mine the SC.

The moment an additional coined is issued on the sidechain that cannot be redeemed 1:1 with BTC ALL the coins on that sidechain become sidecoins.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 03:33:34 AM
 #15547

you're not reading properly.  a SC with a sidecoin can also accept scBTC.  it's the scBTC that have the 2wp, as you say.  therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards.  this is why they will MM and eventually directly mine if enough scBTC appears on the SC.

I don't believe this is quite exact.

A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC.

For that reason, sidecoins are exactly like altcoins

the dev can design the peg and the SC with any properties he wants.  he could design the exact scenario i outline; a SC with a 1:1 peg for BTC <--> scBTC that also issues a block reward for a new sidecoin while at the same time processing scBTC and sidecoin tx for fees.

this would definitely attract MM initially, and if highly successful, defecting Bitcoin miners who direct mine the SC.

The moment an additional coined is issued on the sidechain that cannot be redeemed 1:1 with BTC ALL the coins on that sidechain become sidecoins.

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.
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November 04, 2014, 03:40:48 AM
 #15548

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 03:51:57 AM
 #15549

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time
Exactly. A state would choose a sidecoin as (dare I say) cryptofiat. They would exchange for BTC at the border.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 03:54:19 AM
 #15550

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time

Just to carry on this idea, I think this is something most of you fail to realize.

Any innovative feature ported to a 1:1 chain will inevitably succeed over a sidecoin.

Users will congregate to the safest, most risk-adverse chain and the one with a deterministic, floating peg is certainly not it.

Miners will MM only the most popular chain where there is sufficient value therefore there are considerable chances that miners will have no incentive to secure the sidecoins considering it is doubtful they will attract any user in the long run.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 03:56:11 AM
 #15551

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time
Exactly. A state would choose a sidecoin as (dare I say) cryptofiat. They would exchange for BTC at the border.

And ban the use of any other cryptocurrency throughout the country ?

You realise this is like saying you can use the internet but please don't download songs.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 04:01:42 AM
 #15552

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time

i actually see your point.

what did you mean by the bolded part?
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November 04, 2014, 04:08:38 AM
 #15553

how are those cheep coins working for you  Smiley OT can be as decentralized as using a BitTorrent client to assess the BitTorrent network, 100%  decentralized, and available without a prototypical change why so insistent SC are better?  

FYI inflation in value on a SC is what prevents one converting back into BTC, one want to use the value enabled by the SC, and if it isn't there you want to convert back the BTC.

I will be honest I haven't looked into OT in much details but if I understand it right, can the same concern you guys parade around not be applied to OT as well?

If OT gains traction and develops innovative utilities then is it not right that most txs would occur on their network and would be even more dangerous for the miners than SCs?

I'm not sure I understand your last comment. Value is not inflated using utility chains working with a 1:1 peg, the ledger is preserved and no additional coins are created.

re the last point there need not be value inflation on a SC, but there could be.

re. OT it's not a change on the prototypical level, so no risk to the incentives in mining Bitcoin over time. As there will always be as similar risk as there is with SC, it naturally gets priced in in the market. OT in my view enables the vision people see when thinking of Bitcoin as a trust free reserve currency. 

OT can be a  "decentralized exchanges" here is an intro as to how to do it without screwing with the bitcoin protocol.
http://youtu.be/teNzIFu5L70?t=1m

and some more info.
https://www.youtube.com/watch?v=vtJcUM5-TeA

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 04, 2014, 04:09:15 AM
 #15554

i actually see your point.

what did you mean by the bolded part?

Well I guess someone COULD create a sidechain that is capped at a certain amount of 1:1 units and then if you do not hold any of that stake you are stuck using the sidecoin to use the feature but to be frank I honestly don't see how someone could be fooled by such a scheme.

The bolded simply points out that in such a situation another developer could simply clone the feature of the sidechain and make it available through a 1:1 peg with no cap.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 04:09:59 AM
 #15555

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time
Exactly. A state would choose a sidecoin as (dare I say) cryptofiat. They would exchange for BTC at the border.

And ban the use of any other cryptocurrency throughout the country ?

You realise this is like saying you can use the internet but please don't download songs.
I don't see any businesses selling pirated songs or movies, because only the legal ones have value. I don't see Americans using Pesos. Nobody will sell a currency if it is not liquid enough to use in a brick and mortar store. Just like every other foreign currency, you will be asked to leave it at the border.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 04:12:30 AM
 #15556

how are those cheep coins working for you  Smiley OT can be as decentralized as using a BitTorrent client to assess the BitTorrent network, 100%  decentralized, and available without a prototypical change why so insistent SC are better?  

FYI inflation in value on a SC is what prevents one converting back into BTC, one want to use the value enabled by the SC, and if it isn't there you want to convert back the BTC.

I will be honest I haven't looked into OT in much details but if I understand it right, can the same concern you guys parade around not be applied to OT as well?

If OT gains traction and develops innovative utilities then is it not right that most txs would occur on their network and would be even more dangerous for the miners than SCs?

I'm not sure I understand your last comment. Value is not inflated using utility chains working with a 1:1 peg, the ledger is preserved and no additional coins are created.

re the last point there need not be value inflation on a SC, but there could be.

re. OT it's not a change on the prototypical level, so no risk to the incentives in mining Bitcoin over time. As there will always be as similar risk as there is with SC, it naturally gets priced in in the market. OT in my view enables the vision people see when thinking of Bitcoin as a trust free reserve currency. 

OT can be a  "decentralized exchanges" here is an intro as to how to do it without screwing with the bitcoin protocol.
http://youtu.be/teNzIFu5L70?t=1m

and some more info.
https://www.youtube.com/watch?v=vtJcUM5-TeA


thank you, I will look into this but you did not adress my point.

if most of the transactions occur on OT then the danger is even greater for miners considering unlike SCs they do not get to mine and profit from OT, correct?

and regarding inflation on a SC. yes indeed there could be, but if there is then it becomes much like any other altcoin and this inflation does not affect the BTC ledger.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 04:17:00 AM
 #15557

brg444, did you ever address the concern that a utility chain has the chance to permanently attract all tx fees to itself in the long run at the expense of BTC miners who need those tx fees?  or is your answer simply that Bitcoin will pre empt that by adopting said innovation before that happens?
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November 04, 2014, 04:17:55 AM
 #15558

I don't see any businesses selling pirated songs or movies, because only the legal ones have value. I don't see Americans using Pesos. Nobody will sell a currency if it is not liquid enough to use in a brick and mortar store. Just like every other foreign currency, you will be asked to leave it at the border.

But my friend we are in CRYPTO world!

If they want to force the use of cryptofiat upon every businesses in the country then let them do it.

Let's use your analogy with Pesos(BTC). Remember there are no borders in CRYPTOworld. So imagine that I have this magical wallet that contains only Pesos(BTC). Any time I have to pay in an american brick and mortar store that only accepts USD(cryptofiat) my magic wallet automatically transfers my pesos(BTC) into USD(cryptofiat). The merchant receives cryptofiat, hands over the good to me and we are both happy!

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 04, 2014, 04:27:20 AM
 #15559

I don't see any businesses selling pirated songs or movies, because only the legal ones have value. I don't see Americans using Pesos. Nobody will sell a currency if it is not liquid enough to use in a brick and mortar store. Just like every other foreign currency, you will be asked to leave it at the border.

But my friend we are in CRYPTO world!

If they want to force the use of cryptofiat upon every businesses in the country then let them do it.

Let's use your analogy with Pesos(BTC). Remember there are no borders in CRYPTOworld. So imagine that I have this magical wallet that contains only Pesos(BTC). Any time I have to pay in an american brick and mortar store that only accepts USD(cryptofiat) my magic wallet automatically transfers my pesos(BTC) into USD(cryptofiat). The merchant receives cryptofiat, hands over the good to me and we are both happy!
Maybe you didn't notice that I was agreeing with you in the point that people will chose a 1:1 if they have a choice. Your magic wallet not may not exist if the cryptofiat is not exchanged outside of legal channels. All I'm saying is that we should expect states to ban 1:1 pegged cryptocurrencies at first.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 04:28:12 AM
 #15560

brg444, did you ever address the concern that a utility chain has the chance to permanently attract all tx fees to itself in the long run at the expense of BTC miners who need those tx fees?  or is your answer simply that Bitcoin will pre empt that by adopting said innovation before that happens?

I did.

Here is my example :

if faster tx times is implemented WITHOUT security tradoff to the SC then it makes perfect sense that the mainchain would incorporate the feature natively.

since you refuse this scenario, then indeed, as mentionned in the whitepaper, the scBTC might attract considerable, even the majority of the coin.

BUT

Quote
As there are no changes to parent chain consensus rules, everyone can switch in their own time without any of the risks associated with consensus failure.

The price of scBTC will NOT riser faster than BTC's since a BTC can claim a 1:1 stake in the SC so they are effectively worth the same.

In such a scenario, assuming there are still mining rewards being handed over, the miners will continue mining the BTC chain since they can claim the new, widely used, scBTC 1:1 from the BTC they mine.

So essentially, withstanding some VERY particular and farfetched situation, even the last one to jump boat can claim his equivalent stake on the scBTC chain.

Of course this implies a security issue in that effectively all of the users would have to export their cold wallets and what not over to the new blockchain. This is why I'm arguing that people will be very reluctant to follow such a mass exodus and that the more likely scenario is that when the mainchain developers realize that the market has voted for whatever feature is included in the sidechain they will fork it onto the mainchain so as to create a less risky transition.

Remember that if the sidechain does induce this mass exodus it will need the consensus of all nodes and miners to become the mainchain and so I believe that in this situation, the nodes and miners will simply conclude that a fork of the existing mainchain is a safer proposition.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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