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?
My understanding, and I might be wrong :
- I'm not sure about the concept of scBTC trading on exchanges for reasons that buying a 4$ share of BTC and transferring to SC will give you 4$ share of scBTC. Value of BTC and sBTC are correlated, no matter the 1:x peg.
- My assumption is the share of scBTC pie you can claim is representative to the share of BTC you own. In that sense, if a SC is so superior that there are clear incentives for people to transfer their BTC to this chain, it does not matter when they do it for their stake in BTC, even while on BTC's blockchain, is simply a stake of scBTC they have not claimed YET.
- If this assumption is true then automatically the value of a Bitcoin will rise will the value of its "to-be-claimed" stake in sBTC and be redeemable for the same USD exchange rate
edit : Maybe this makes no sense but this is how I understand it.