Peter R, what if scBTC#1, scBTC#2 and scBTC#3 is still same BTC and has equal value in all chains b/c 2wp works ?
Transfering BTC from chain to chain is only "thought experiment". I have never seen or touched Bitcoin -> b/c it is only private key.
I'm just trying to make incremental progress in my understanding by answering the question "on which ledger is the value stored?" The probability that the 2-way peg is severed is a different discussion.
I think it's clear that value is stored on both Bitcoin's Ledger and the Sidechain's Ledger. Erdogan phrased this succinctly:
There is a separate value for the scBTC. When the peg is broken, this value is revealed.
The % of value that is stored on the sidechain is related to the scBTCs utility and network effects, as NewLiberty pointed out:
Value = convertibility + utility/network effects
So value is retained even if convertibility is closed.
But I'm not sure that these arguments are strong enough to show that SPV sidechains hurt Bitcoin's sound-money property. In my opinion, this is only possible in Case #3, but, like Erdogan implied, it might be highly unlikely (impossible?) for a sidechain to obtain the status of #3.
The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.