Gold collapsing. Bitcoin UP.

[smooth]

spin-of doubles units (bitcoins  + altCoins)

Yes but since the units are distributed in the same ratio, it is non-dilutive.

Similarly you could redefine "Bitcoin" down to 100 Satoshi's, which has actually been proposed. This creates more units since the number of units increases from 22 million to 22 trillion (trillion = 10¹²), but does it is not diluted since there is no change in the distribution of ownership.

SC do not create new units

This is only true for 1:1 side chains. Not all side chains need to be 1:1.

[Odalv]

spin-of doubles units (bitcoins  + altCoins)

Yes but since the units are distributed in the same ratio, it is non-dilutive.

Similarly you could redefine "Bitcoin" down to 100 Satoshi's, which has actually been proposed. This creates more units since the number of units increases from 22 million to 22 trillion (trillion = 10¹²), but does it is not diluted since there is no change in the distribution of ownership.

SC do not create new units

This is only true for 1:1 side chains. Not all side chains need to be 1:1.

Spin-of will create 13M worthless units ... it will take ages and millions(billions) $ until you build solid market cap. (so it never happen, or bitcoin must die)

OTOH SideChain can use same functionality and will use bitcoin market cap. ... has big value from the beginning.

[brg444]

Would it not be possible to create spin-off coins through a sidechain?

Technically I suppose, but such a coin couldn't be backed by bitcoin or offer the 1:1 conversion feature.

This coin could benefit from spin-offs' idea of Bitcoin-blockchain distribution and also from sidechains' convenient, integrated, merge-mining.

I guess we should define some terms here. By "side chain" I mean the on-chain convertibility feature. This is usually described as 1:1 but doesn't need to be that, it could use some other fixed ratio or a non-fixed formula.

Merged mining can be done with or without this sort of side chain. They are independent.

Right, I also realise there is a fundamental error in my proposition. Sidechains issuing assets (sidecoins) are responsible for their security (through their own mining algo).

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

[brg444]

Spin-of will create 13M worthless units ... it will take ages and millions(billions) $ until you build solid market cap. (so it never happen, or bitcoin must die)

Very valid point.

I recognize the value of sharing the same ledger but this does not necessarily mean the value is shared.

[Odalv]

This is only true for 1:1 side chains. Not all side chains need to be 1:1.

It works too for a sidechain  that is 1:1000 (to fund) and 1000:1(to withdraw)

[smooth]

This is only true for 1:1 side chains. Not all side chains need to be 1:1.

It works too for a sidechain  that is 1:1000 (to fund) and 1000:1(to withdraw)

If the ratio is higher than 1:1 then it does create new units. If it is lower than it destroys (or at least locks) units.

The number of units is irrelevant. What matters is the share of ownership.

[smooth]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.

[Odalv]

This is only true for 1:1 side chains. Not all side chains need to be 1:1.

It works too for a sidechain  that is 1:1000 (to fund) and 1000:1(to withdraw)

If the ratio is higher than 1:1 then it does create new units. If it is lower than it destroys (or at least locks) units.

The number of units is irrelevant. What matters is the share of ownership.

SC cannot unlock more bitcoins than was locked.  If there is SC what will create new scBTC then
a) some will end up holding scBTC but this cannot be converted to BTC
b) SC must implement some conversion ratio -> consensus of SC participants

[brg444]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

But sidechains that do not create issued assets (additional coins) certainly are more secure than altcoins

[smooth]

This is only true for 1:1 side chains. Not all side chains need to be 1:1.

It works too for a sidechain  that is 1:1000 (to fund) and 1000:1(to withdraw)

If the ratio is higher than 1:1 then it does create new units. If it is lower than it destroys (or at least locks) units.

The number of units is irrelevant. What matters is the share of ownership.

SC cannot unlock more bitcoins than was locked.  If there is SC what will create new scBTC then

Correct, but "units" can be created.

For example, it has been stated that conversion may be a function. For example, a side chain may double its number of units every week while cutting its conversion ratio with Bitcoin in half every week.

No asset of any type can create units of Bitcoin (though changes to Bitcoin-itself could change the number of units as I described i.e. moving the decimal). Units of other assets can and will be created.

[Odalv]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.

But it is only vulnerability for SC participants. Bitcoin users are not affected.
It is more secure than implement new features into bitcoin protocol where all users are affected.

[smooth]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

But sidechains that do not create issued assets (additional coins) certainly are more secure than altcoins

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

I can't force anyone to use it, but that is true for any altcoin.

[smooth]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.

But it is only vulnerability for SC participants. Bitcoin users are not affected.

Same as any other altcoin

It is more secure than implement new features into bitcoin protocol where all users are affected.

Agree!

[brg444]

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

My understanding is that sidechains that do not issue their native currency are not mined but rather the movement of assets between them (transactions) are integrated into BTC's mining blocks

See this quote from the paper :

Furthermore, because sidechains transfer existing assets from the parent chain rather than creating new ones, sidechains cannot cause unauthorised creation of coins, relying instead on the
parent chain to maintain the security and scarcity of its assets.

Can you explain why this is not so?

[Odalv]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

But sidechains that do not create issued assets (additional coins) certainly are more secure than altcoins

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

I can't force anyone to use it, but that is true for any altcoin.

altcoin does not have Bitcoin market cap. and never/(not soon) will have ... so altcoin is useless for economy (is good for children to play with :-) )

[Melbustus]

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

My understanding is that sidechains that do not issue their native currency are not mined but rather the movement of assets between them (transactions) are integrated into BTC's mining blocks

See this quote from the paper :

Furthermore, because sidechains transfer existing assets from the parent chain rather than creating new ones, sidechains cannot cause unauthorised creation of coins, relying instead on the
parent chain to maintain the security and scarcity of its assets.

Can you explain why this is not so?

This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Again, back to the key thing sidechaining provides; ie, just a method to specify, at the protocol level, an exchange rate between assets on different sidechain-supporting chains. And back to this exchange rate being definable by "any deterministic function". There can therefore be many sorts of non 1:1 relationships. For example, maybe monero gets "side-chain enabled" for 20% of its future supply, but the other 80% still gets issued as it currently does... Why wouldn't that be possible?

[Odalv]

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.

But it is only vulnerability for SC participants. Bitcoin users are not affected.

Same as any other altcoin

It is more secure than implement new features into bitcoin protocol where all users are affected.

Agree!

What is even more interesting some side chain can create new scCurrency out of nothing e.g.
 - Central Bank can create scUSD and CB can create sideChain where only miner is CB server(who sign every transaction block).
 - Central bank can give you your salary in scUSD and you can use scUSD to pay taxes

If you will use CBSicdeChain is up to you.  But now we have trust-less exchange to BTC/USD.

edit:
CB will exchange you USD scUSD 1:1

[brg444]

This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Actually this passage does come with this footnote to be clear :

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of. We mean to emphasise that they can only affect the scarcity of themselves and their child chains.

[smooth]

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

My understanding is that sidechains that do not issue their native currency are not mined but rather the movement of assets between them (transactions) are integrated into BTC's mining blocks

See this quote from the paper :

Furthermore, because sidechains transfer existing assets from the parent chain rather than creating new ones, sidechains cannot cause unauthorised creation of coins, relying instead on the
parent chain to maintain the security and scarcity of its assets.

Can you explain why this is not so?

This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Again, back to the key thing sidechaining provides; ie, just a method to specify, at the protocol level, an exchange rate between assets on different sidechain-supporting chains. And back to this exchange rate being definable by "any deterministic function". There can therefore be many sorts of non 1:1 relationships. For example, maybe monero gets "side-chain enabled" for 20% of its future supply, but the other 80% still gets issued as it currently does... Why wouldn't that be possible?

Any of this is possible. The question is what gets accepted by the market.

The side chain proposal has increased the breadth and scope of possible altcoins. Maybe quite the opposite of what they intended!

[Melbustus]

This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Actually this passage does come with this footnote to be clear :

Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of. We mean to emphasise that they can only affect the scarcity of themselves and their child chains.

Indeed.

So here's where I'm landing on this:

1) Sidechains are just a way of defining an exchange rate function at the protocol level.

2) This function can have nearly any definition. Some definitions may serve to economically boost demand for bitcoin, some may not.

3) Sidechained ledgers can span a huge range of economic-entanglement with bitcoin, from just about completely separate (ie, like any other alt), to effectively being 100% "backed" by bitcoin-the-unit.

4) The *HOPE* of sidechain proponents is that many chains will be developed which use an exchange function that creates demand for bitcoin; eg, a function that defines 100% of the new chain's supply in terms of bitcoin.

5) Given that sidechaining makes it possible to create new protocols that are credibly "backed" by bitcoin, the hope is that new protocols which *aren't* backed by bitcoin (ie, "traditional" alts) immediately become suspected of pump-n-dump/profit motives as opposed to pure technological-experimentation motives.


It'll be interesting to see how strongly #4 holds in the market over time.