Quote from: Blitz on November 01, 2014, 05:37:23 PM

Quote from: Kupsi on November 01, 2014, 05:20:06 PM

Quote from: Blitz on November 01, 2014, 05:11:45 PM

I read it but I feel like I'm missing something:

Quote

its a 2 way peg, so both BTC and scBTC can move freely back and forth.

Can you elaborate? How are the both to be pegged? How is the peg rate determined, and does it float?

Since you are free to move coins between BTC and scBTC, the price will be the same. You don't sell scBTC for a lower price when you can transfer it back to BTC and sell it for the full price.

But how does this work? Is it just a way of destroying Bitcoins without actually destroying them (ie destroying Bitcoin and creating Sidecoins and vice versa creating Bitcoins and destroying Sidecoins, "converting" them 1:1) at the protocol level? I suppose cypherdoc's argument is that assuming Sidecoins will be valued less than Bitcoins of equal convertible value, people will be arbitraging that.

If I have understood correctly, then this doesn't seem a problem. To profit off this arbitrage, you need to buy Sidecoins (for USD say) and sell them for Bitcoins (selling those again). Thus the price has to rise to a level where friction prohibits arbitrage. It sounds like we're discussing a perpetuum mobile here. Either that, or I still misunderstand. Cheesy

You got it right.