i'm missing something here.
why can't the scBTC develop an independent value in USD on their own on an exchange? and if that value starts going up relative to the BTC value b/c the SC turns out to be better functionally, then why wouldn't every BTC owner be forced to transfer their BTC over to scBTC along with a migration of direct mining hashpower to the SC? if the SC is better, the difference in value btwn BTC and scBTC can't be arbitraged away.
the end result being a destroyed Bitcoin and a "new" Sidechain dominance.
Because there is a MATH no 3D party -> how to convert(lock) BTC to scBTC
Rule #1
You can anytime convert BTC to scBTC using this conversion function (if btc protocol is not broken)
repeat(
1. Convert BTC -> scBTC
2. You sell scBTC for $
3. buy more BTC at Bitstamp
)
=> scBTC has only value of BTC (SideChain has value based on BTC)
this is where i still don't understand. remember, i'm trying to think of a scenario where SC's can hurt Bitcoin.
presumably, both BTC and scBTC will be traded 24/7 on an exchange for USD. if a scBTC begins to exceed the value of a BTC in USD terms b/c the market perceives the SC to have a superior feature of whatever, then BTC will start to migrate to the SC as scBTC. why? b/c they're worth MORE in USD terms. at some point, you could even imagine where there could be a rush to make this conversion if the tech is that much better. mining power would also migrate to the SC. this cannot be arbed away b/c in this scenario, the SC is superior making the scBTC more valuable,
no matter that a 1:1 peg exists. this could get quite disorderly and ecoomically disadvantageous for BTC holders with this confirmation and contest period of 1-2 days. what am i missing?
SideChain is not same as AltCoins
-> SideChain does not require POW nor "blockchain" to work .. (but SC can use them, it is problem of SC-participants)
1) SC will only set-up some address/addresses in Bitcoin-world (lock bitcoins to prevent double-spent) -> and create SideChain-world
2) In SC-world you can do SC-transactions (even by e-mail) -> build some hash-tree (you do not have to broadcast transactions to ALL WORLD and verify that ALL SEE THEM, b/c only participants matters)
3) SC-world has rules (Bitcoin users not affected) how to withdrawn/unlock bitcoins from scBTC (they must be able to create valid bitcoin transaction to unlock bitcoins).