That would only work if ALL users decided to move to SCbtc and no user wanted to buy BTC under any circumstances, even with spreads in the thousands of dollars or more. If the tech were that far superior then SCbtc deserves to win out. In reality, there will most likely be debate over which system is better and not all users will convert, resulting in normal arbitration.
People would certainly buy BTC if scBTC were worth more, but only at something less than the scBTC value in order to convert it and make a profit. There would be no reason to convert back
Yes there is reason to convert back. You sell the scBTC at a profit and take the profit and buy more BTC to convert. Rinse and repeat.
No that doesn't work
once all the BTC are converted. The only ones you could possibly find to buy for conversion would be newly mined coins, and miners would have no reason to sell them to you. They can just convert themselves (which is what they would do).
The arbitrage you is exactly what would happen, but it would quickly convert all the BTC until there were none left, then the main chain would simply die (other than for mining purposes).
That is a bold assumption, pun intended. If I had a satoshi for every time someone said the price of bitcoin could go to 0, then I would be rich... as I said before, if the technology of SCbtc is that great, then it deserves to win.
I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.
You said if all the bitcoin are converted. If all the bitcoin are converted that means there are no more sellers left and the price is zero because no more trade is possible in bitcoin.
No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.
Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.