Quote from: cypherdoc on November 02, 2014, 01:17:59 PM

Quote from: inca on November 02, 2014, 01:08:03 PM

Quote from: Adrian-x on November 02, 2014, 04:50:36 AM

Quote from: brg444 on November 02, 2014, 01:31:27 AM

The value created on the utility sidechain is mirrored in BTC's value. I don't see how you can argue this.

I believe this is the issue either I'm wrong or you're wrong.

Bitcoin the currency is a mental bridge to understanding money as memory. The blockchain is the money. The blockchains existence is dependent on the economic incentive to wright transactions to it, it is an economic ledger if you adopt it. (Adopting Bitcoin is agreeing with the utility that it is the ledger.)

When rewards drop to a low quantity, possibly 20 months from now more likely 6 years, transaction fees will be a significant portion of the incentive to mine blocks. The network is dependent on incentivizing miners - to write transactions. In this model there is no wasted hashing, hashing grows to a point where it is supported by the value it provides eventually it grows to the marginal cost of transactions fees necessary to secure the network. The drop in reward forces efficiency. And competition to mine for fees is incentivized by accepting the lowest fees possible. The mining market will tend to maximize profit by accepting the lowest fees that are viable or competition will get a sustaining advantage.

Messing with this has ramifications it changes the core of Bitcoin.
It really doesn't matter what miners think so long as they are at least 2 and they are in competition to write to the ledger in exchange for value that is redeemable in that ledger. The economic incentives, the value in the network, will ensure the appropriate industrial energy is invested.

SC offer a secure way to use your BTC (Bitcoin the currency) but they don't secure the value, SC give me a choice transfer the value into another chain if it has greater value, and exchange it back if the other chain has less value.

I only believe BTC has a value because the only way in and out is by moving economic energy to the blockchain, Bitcoin in my mind is the blockchain and the currency are inseparable. It is just money is memory, value on the blockchain.

SC obviously have to be innovative (cypher' arguments have largely IMO focused on how you can fake success by messing with price.) But assuming they offer better value fake or real BTC will lock in. The BTC stay there but the value expressed as economic energy moves across.

To secure this value it will need to be mined, MM is the only option as the value will be comparable to that of Bitcoin.
The miners will mine where ever the value is. If the SC becomes more valuable than Bitcoin (note the value can come from speculation manipulation or innovation we don't get a choice) then miners will derive there reward from the chain that gives the most incentives, nothing guarantees it will be Bitcoin.

We also know Bitcoin will be disadvantaged over time with it's diminishing reward, and if the value is in a SC it will derive the highest reward from transaction fees. (The most viable argument I've heard is miners just MM all the SC, and I don't think that is a secure stratergy.) SC's could be anything even have an inflation rate however improbable that is it's not impossible, and not unlikely. I conclude that miners will treat the value chain as the main chain and the Bitcoin blockchain would become less secure as miners don't have an economic incentive to keep it secure. (They earn off another chain)

Given we don't know who how or what SC will prevail we can probably expect a greater variety than we see with Alts as there are fiewer risks, we know if they fail to become the value chain they lose nothng and everything to gain if they succeeded.

SC represent an attack vector fare more viable than a 51% attack, I for one wouldn't want to get 1:1 BTC back if the SC had more liquidity and a bigger network. And if that happened Bitcoin would not be as viable for me.

I am convinced Bitcoin has no place being the dominant money or Master Chain unless it represent the economic memory or the greatest liquidity, SC change that, one may emerge that is adopted for reasons that appeal to non Austrian ideals, and absorbs Bitcoins value.

It looks to me like SC enthusiasts believe BTC the currency is inseparable from the value in Bitcoin the blockchain. When in fact SC only secure BTC the currency and facilitate Blockchain the money to move onto a different chain with different incentives or rules. In reality securing BTC is easier than securing the value on the blockchain. I'm a proponent of Bitcoin the blockchain not blockchain technology.

Your argument is predicated upon miners losing revenue from a reducing block reward towards just the transaction fee over time. So far this has been massaged by a rising unit price per bitcoin. If bitcoin is going to continue to dominate and grow as a cryptocurrency, even perhaps supporting several side chains then it will be necessary for the market capitalisation to rise considerably in USD terms, which will negate the need to seek profit elsewhere?

Side chains need to be secured if decentralised by a mining network. If a side chain offers greater rewards to miners than the main bitcoin blockchain, then that side chain if operating through a fixed 'two way peg' must generate revenue for miners through transaction costs alone - except in specialised niche cases (blockchain storage, ultrafast micro payment transactions) people probably arent going to be too keen to pay a lot more to use a less secure chain when bitcoin works just fine.

But this is where an altcoin added to the SC could factor in.

As i have said previously, a fixed two-way peg doesn't IMO endanger the main bitcoin blockchain as long as it is truly fixed.

Where you consider several chains linked together via floating pegs then things get difficult to imagine clearly.

If a sidechain based on an amazing new coin with vastly superior properties to bitcoin (USDcoin) arises which is linked via a floating peg to the main chain then I could conceivably see it causing problems in the long term if lots of coins migrate over and miners decide to move over chasing rewards. But I still think we come back to the same old argument that no altcoin has ever come even slightly close to dethroning btc despite numerous permutations in existence. I personally wouldn't be interested in moving my coins through a floating peg to a side chain, would you?