Quote from: JorgeStolfi on January 02, 2015, 02:47:31 PM

Quote from: adam3us on January 01, 2015, 10:56:54 PM

Well the term sidechain is sort of fuzzy pre-existing term that means something like a related chain that watches or interacts with a parent or sibling chain.

Thanks for taking the time to answer my stupid questions. If I can abuse once more of your patience, please consider this scenario:

  Someone, not connected to Blockstream or any other bitcoin entity, creates a new altcoin GreatNewCoin (GNC).

  GNC is basically a clone of bitcoin, with SHA PoW, block rewards etc.

  GNC has a few advantages over BTC, say 10x faster block rate; but is also endorsed by Bill Gates, Oprah Winfrey, Justin Bieber, and the Dalai Lama.

  GNC can be merge-mined with BTC, and occasionally inserts hashes into the BTC blockchain to make itself "secured by the bitcoin blockchain". Still, GNC is not explicitly supported by the bitcoin protocol, and there is no expliciit "transfer" of BTC to it.

  Most bitcoin miners will merge-mine GNC too, since they may win the 50 GNC block reward as well as the 25 BTC reward, without extra work. Thus GNC, from the start, has the same network hashpower as BTC.

  Various people set up exchanges between BTC, GNC, and national currencies. People also trade GNC over-the-counter, person-to-person, etc. BitPay adds GNC as a payment option for all their affiliated merchants. These ventures do have no explicit support in the GNC (or BTC) protocol and network.

  GNC price rises from 0.10$ to 1$. Some smart BTC holders sell their BTC for dollars or GNC. Some dumb GNC holders sell their GNC for dollars of BTC. The price of GNC keeps rising, while that of BTC starts to drop.

  One Monday at 06:30 am, the market suddenly gets the idea that GNC is going to supersede BTC. BTC holders rush to sell BTC and buy GNC. In a few hours, the price of GNC rallies to 1000$, while that of BTC crashes to near zero.

  At 11:30 am, the Winkles wake up to discover that their 200'000 BTC are now worth 2 kopeks and a Somalian shilling.

  Since the BTC rewards and fees are now worthless, most miners stop mining BTC and keep mining GNC only. Only a few persist, for sentimental reasons. The BTC block rate drops to near zero for months, until the difficulty gets readjusted.

  Then someone, not connected to Blockstream, GNC, or any other bitcoin entity, creates a new altcoin SuperShibaCoin (SSC)....

Summary: doesn't merged mining provide a path for an altcoin to steal bitcoin's network power and market cap, with little investment, even without any change to the BTC protocol and without any special mechanism to "transfer" BTC to it?

Could some sidechains innovation provide suitable incentives to miners that would prevent this risk?

That'd be a great invention.

I mean your scenario is a little bit unrealistic but I think it would be secure.