Bitcoin block rewards shrink as we know, but soon like 6 years it would be feasible to consider the transaction fee making up a significant part of the block reward. moving those fees to a SC would degrade Bitcoin.
Miners mine both chains. They profit no matter where the transactions take place.
and bitcoins move into the side chain, and the Bitcoin network shrivels, and stop growing because miners cant make a profit from the transaction fees.
Again, miners don't have to choose one chain to mine. They can and will profit from mining the two.
your vision of bitcoin being the backing for all of chain growth is only viable so long as Bitcoin is the MC, when it stops being the MC due to the Metacafe's law the SC will absorb and shake themselves of it, the SC may have an inflation sachem that rewards miners in a more favorably, be better amalgamated with the Banking carrells and it is not a stretch to see bitcoin being abandoned, or even needed.
SC that take improve on bitcoins utility do it by inflating value off chain, and bitcoin dosn't grow the SC grows.
I'm not convinced by your theory that Bitcoins locked on 1:1 peg creates a new network that competes with Bitcoin's. As for the second part of your comment, it defeats logic to suggest Bitcoin would be defeated by an inflationary sidechain with closer ties to the banking cartels. It is straight up ridiculous in fact.
the issue is you get the value leaking problem if the SC are beneficial. anonymity isn't so great when you want to prove you made a payment. at this point in time it is the No. 1 Killer app as there are lots of stolen coins wanting to come out, and it would help Bitcoin grow like in silk road commerce.
but ultimately Bitcoins Pseudonymity is forcing decentralized trust free serves like OpenBazaar and OT exchanges where your identity is never revealed, or if it is you chose which one. Decentralized and trust free everything is much more valuable then anonymous BTC, in a decentralized trust free world Pseudonymity is anonymity
I agree 100% with your comments on transparency and anonymity but I take problem with your "value leaking" theory. There is no value leaking, it is an essentially an ecosystem sharing value in a synergic manner.