[A majority cartel] can only force soft-forks, hard-forks are ignored by full-nodes and clients. An attempted forced-hard fork results in hostile miners forming an alt-coin with no users. The limiting factor is soft-forks are quite flexible and can do a lot, some of which could be undesirable.
Perhaps I did not explain myself clearly. Here is a more detailed scenario:
http://www.reddit.com/r/Bitcoin/comments/2qdfat/without_downvoting_me_to_hell_can_someone_explain/cn5s41zIs there anything wrong with that, technically or economically?
Only ideological purists will be upset, but all they could do is create yet another fork, with a PoW that cannot be mined by the current equipment. But then no orthodox miners could mine this new "true bitcoin reborn" chain either, so it would start out with a minuscule CPU-based network.
the nuclear big-red-button option of tweaking the PoW hash is a meta threat to miners that they dont quite have the upper hand - if they abuse it, or get too crazily centralised - people would worst case be willing to push it.
Probably thats a MAD argument that keeps miners somewhat sensible as if that button is pushed they are sitting on $500m of scrap electronics with a low scrap parts salvage value.
That button is not MAD but SAD, assured
self-destruction. Or not even that, It would just create another junk coin, with a minuscule network, that bitcoin users could start using -- if they would rather use a junk coin than give in to the cartel. By definition, the faithful miners would not be able to mine it. Meanwhile, the cartel's fork would continue working as before, with at least 51% of the original hashrate; and the only option for users and miners to keep using bitcoin would be to upgrade to the cartel's protocol.
Putting it more simply: an entity that can jam some process for sufficiently long time can force the people who depend on that process to accept changes to it, as long as the changes are not as bad as the jamming itself.
Outside of spam limits which could be protocol enforced, its caveat emptor, you shouldnt put money into a chain unless there is some assurance that security & bitcoin protocol knowledgeable people have audited it. People could certify chains (like sign them - "my name is blah and I'm a security researcher with reputation and I and my buddies audited this code and its good") or wallets could etc. Its good and a feature that people can opt to use uncertified chains. You want a situation where there is real open possibility for technical innovation & competition in chain features.
You also want no central control so no chains can get black listed.
That is my understanding, and that is I why I cannot see any technical content in the sidechains proposal. Unless it specifies some things that every sidechain must do (or must not do), with a mechanism to enforce those constraints, it will not bring any new tools or ideas to cryptocurrency technology. So far it is only a nomenclature proposal: "let's use the word 'sidechain' for any project or entity that could 'own' some bitcoins for some time".
Why wouldn't Bitstamp be already a sidechain, for example?
EDIT: not worse --> not as bad as