Quote from: rocks on November 07, 2014, 11:22:29 PM

Quote from: cypherdoc on November 07, 2014, 10:51:31 PM

Quote from: NewLiberty on November 07, 2014, 10:12:04 PM

Quote from: brg444 on November 07, 2014, 09:39:12 PM

Quote from: cypherdoc on November 07, 2014, 09:19:53 PM

i think the true answer is, "it's impossible to know". a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs. in that sense, the BTC price could tank. i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario. or, yes, it could "make all our BTC more valuable!" that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic. today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC₁.
2) Some scBTC₁ is SPV'd to scBTC₂.
3) scBTC₁ is discovered to be a scam (or just a bad implementation) whereas scBTC₁coin massively inflates so that no one on scBTC₂ has any incentive to SPV back from scBTC₂ to scBTC₁ and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit: Is there a way to have such an event without sidechains, or is this a "new" risk?

this scenario is helpful in conceptualizing what is happening.

the "BTC is locked up on the MC in UTXO and never leaves" potentially gives a false impression that there will always be 21M. it tempts one to ignore what's happening beyond the other side of the 2wp out there in SC world. the pass thru model forces one to consider and concentrate on what is going on out there as these scBTC are jumping from SC to SC each one of each could fail or be a scam. assuming there will be attrition of scBTC over time, the conclusion is there will always be <21M ever decreasing.

Whether the BTC are transferred to one sidechain or to multiple links of the sidechains, the result is the same. Either:

1) Bitcoin is the backing reserve asset to any linked scBTC. If so then convertibility is maintained and Bitcoin functions as the security mechanism, or

2) scBTC jump from SC to SC (as your example) and one sidechain in the link breaks, which breaks the link back to the underlying backing BTC. This however in effect converts that scBTC into an altcoin, those scBTC are no longer convertible with BTC and Bitcoin is no longer providing the underlying security.

Such a situation converts a SC into an altcoin.

I'm fine with that because the market is showing how network effects are slowly crushing altcoins. Once an SC converts into an altcoin, it now loses all network effects and is cast off on it's own. It now functions separately from the entire bitcoin ecosystem and can not be used with that ecosystem. Such an altcoin I believe will lose value and diminish to nothingness. You can't hide this from users, they are now locked out of the rest of the bitcoin ecosystem, that is huge.

Altcoins scare the crap out of me, the are the only threat to the Sound Money principle. But as stated before network effects seem to be properly working, I expect that to continue.

The pegging mechanism ensures convertibility, which exposes if the sidechain is #1 or #2. If a sidechain breaks convertibility, it becomes #2 it is now an altcoin.

we've been told that one of the benefits of SC's is in crushing altcoins. if the current network effects are already doing that, and i agree that they are, that takes away a major argument to implement them.

NL's point is that this severing of the path back to BTC will create losers and thus destroy confidence, not only for the loser's themselves, but for the rest of us potentially.