Ninjastic
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Board Speculation
Re: Gold collapsing. Bitcoin UP.
by
thezerg
on 23/10/2014, 22:21:19 UTC
Quote from: Odalv on October 23, 2014, 09:56:13 PM
Quote from: inca on October 23, 2014, 09:36:32 PM
Quote from: thezerg on October 23, 2014, 09:22:52 PM
That's right.  To state it clearly, there will be an arbitrage opportunity.  Buy BTC, transfer into SC, sell SCBTC, buy BTC.  So the price of bitcoin will be lifted with the added value sidechains bring.  In this sense inca, the child chain can never "destroy" Bitcoin even if it ends up carrying 99.9% of the transactions.

Markets and their capitalizations are a funny thing. They are illusory. We talk about bitcoin's current cap as being the price of a single coin multiplied by all the coins in existence. But the reality is far from that as the price is manipulated from, say, 1166 to 350 by a fraction of a few % of the coins in existence, or relatively modest amounts of fiat currency (millions to tens of millions of dollars only) on the way up.

This concept of a 'two way peg' between bitcoin blockchain and side chain is really an exchange. The terms of how many SCBTC can be acquired/released by locking/unlocking actual BTC are flexible and could float, for example based upon fiat exchange value of SCBTC or BTC. If SCBTC use becomes prevalent then it is possible that as the value of BTC falls, SCBTC rises, until BTC is not a store of value.

What you say (emboldened) is probably accurate. But what we care about is bitcoin maintaining value, as it's algorithmic scarcity was designed to do. That is the reason we hold it!

I'm sure 99% SCs will use 1:1 conversion rate and no new SCBTC will be generated ... you will still have your bitcoins, but few will be locked in "fast transfer" sidechain  ... you will have some locked in "exchage" sidechain ... and some in your private business sidechains (not public sidechains)

Yes, the conversion ratio AFAIK has to be algorithmically defined.  So even if its not 1:1 that fact is irrelevant.   If its 1:10 then its 10:1 to go back.  

Inca, the number of BTC that are put on the sidechain is irrelevant.  As long as there is a single Satoshi left "unlocked" on the bitcoin chain, that satoshi can be transferred into the sidechain for SCBTC.  So that Satoshi is worth its value in SCBTC.  As long as SCBTC has value, BTC would be a store of that value.

You're practically arguing against yourself here.  If some awesomely functional chain existed that had the potential to destroy bitcoin's value, would you prefer it to be an altcoin where none of your BTC transfers or would you prefer that it be a sidechain?  If the functionality was really that compelling you can be sure that it would eventually out-compete Bitcoin -- it just may take a few years longer as an altcoin.