I doubt very much that sidechains will prove a satisfactory substitute for truly independent, free-floating alternative cryptocurrencies.
For a start, welding the "alt" into a pegged straightjacket in Bitcoin creates more problems than it solves because it needs to 'hijack' a portion of the bitcoin money supply to generate the alt-coins giving rise to all kinds of liquidity problems (in Bitcoin, by taking coins out of supply and in the alts by limiting their ability to respond to market demand).
Not all sidechains will be one way pegged, like micropayments/merchant sidechains, therefore it won't reduce the coin supply. Though I've never heard of reducing the coin supply being a real issue as btc is infinitely divisible.
When sidechains increase the uses of bitcoin, the adoption should increase along with liquidity.
Bitcoin is already deflationary enough as it is - the altcoin market is a very nice way to address the need for a natural elasticity, monetary growth
and technological diversity without bitcoin developers constantly hammering out code and hardforks. Bitcoin can still form the reserve currency which "backs" all other alts (it's already is doing that - we price the 'alts' in BTC).
The only thing that sidechains couldn't do is change the distribution/monetary growth. But at this point I think the only people who feel those are issues are those looking to get rich quick.
Secondly, what you see right now is the market working: it's showing you what the future's going to be. In other words, you can bolt on all the "warts" you want to Bitcoin physically but there will always be an altcoin market.
Are you sure about that? Only a few months ago the combined shitcoin market cap was ~25% of Bitcoins market cap. Now it's closer to 10%. That would suggest the altcoin cesspool is shrinking and hopefully will be completely phased out.
There's just too much diversity in the world to be able to architect the future into a single technology. It reminds me of the 1990's when Microsoft tried to monopolise the browser market by making Internet Explorer an extension of Windows so the user had "everything in one platform". Sorry - no can do, even though your the biggest technology company in the world with 95% of adoption, your never bigger than people's imagination.
Sorry but that's just patently false.
Look at the internet, a single protocol which 99.999% of people use. There's no reason bitcoin can't become the internet of crypto and have innovations/inventions built upon it.
Sidechains is the kind of idea that someone has as a metaphor for what the market's doing already. It's a nice idea as an economic model but not remotely implementable in practice if the crypto-economy ever gets to a significant size because markets will just blow it away with things like decentralised exchanges which perform the same function but without all the liquidity and technology restrictions of sidechains.
Decentralized exchanges can only trade between crypto and only need to exist if shitcoins are a thing. With sidechains there would be no need for a decentralized exchange because you could seamlessly send btc from sidechain to sidechain.
Nor are sidechains ever likely to meet these requirements because the idea isn't remotely scaleable enough for the reasons I outlined
here (and even if it was it wouldn't address the demand for genuinely de-coupled alt currencies).
Please do elaborate because you didn't explain at all how sidechains are not remotely scalable.
