The same value can not be held simultaneously in the main chain and in a side chain.
But the value of the sidechain is derived from the mainchain and so the scarcity and ledger is respected.
This is a very interesting theoretical question: "where is the value stored for a sidechain?"
blah blah blah
Wow, you can describe all that in one line: The price change will be proportional to the flow derivative.
In other words, if BTC was moving (and would have continued to move) into the sidechain, the SC price when "broken" will rise. If BTC is moving out of the sidechain the price will fall.
If you are still confused think about modelling it. You would best model this by creating "value" as an immaterial quantity. Each chain HAS a value (essentially a market cap, which is price * quantity), based on its usefulness. If 2 chains are pegged, changes to the value cannot be expressed in price, so quantity must change -- that is BTC is transmuted from one chain to another. If 2 chains are not pegged, changes to the value cannot be expressed by moving quantity so price must change. This idea is fundamental; it applies to all commodities and products where you can transform one to another.
the whole point that Peter R is trying to make is that with SC's, value gets "shared" btwn MC and all SC's. with the potential of being "severed" or "fragmented".
we don't want that with Bitcoin. we want it ALL on the mainchain. we want all outsiders to be forced to "buy in" to BTC for their seat at the table.
who here wants to share value with Truthcoin?
Cypherdoc your reasoning is completely flawed. First of all, I know that you aren't an engineer, but you still you should be able to understand that it CANT be ALL on the mainchain. There are diametrically opposed requirements. Like anonymity vs. public spending accountability. Like handling vast numbers of txns per second vs. keeping all transactions forever. Like blockchain spam vs. document timestamping. There are plenty of things with diametrically opposed requirements in life, like sleeping (darkness) and reading a book (bright light); its unrealistic to imagine no 2 applications will emerge in a space which covers the entire concept of economic activity.
Why have all prior altcoins failed? Simply because they're all essentially the same. Different POW? Come on, what end user cares? Bitcoin 2.0 (assets)? Colored coins is good enough, but the market is not mature enough for anyone to care right now.
You may argue that there will never emerge a use case that is both compelling and that Bitcoin cannot handle. Ok in that case there will be no sidechains, because Metcalf's law, etc and so the functionality will simply sit unused, and eventually be deprecated. There is no drawback to this.
But if a use case DOES emerge, the only way to pull that value into Bitcoin is via sidechains -- because with a sidechain the Bitcoin 21million scarcity token can be applied to that use case.
You need to contemplate what you cannot contemplate, not make decisions only based on what you know.
So the ONLY way to get "all outsiders to be forced to "buy in" to BTC for their seat at the table" is via sidechains.
