What's the current thinking on sidechains' impact on Monero (assuming Blockstream gets their opcode through)? Will there be any significant advantages for Monero vs a well-implemented cryptonote sidechain?
(Sorry if this has been discussed a lot recently - signal/noise in this thread seems highish right now)
I can't say what "the" current thinking is, but here is my thinking:
I don't know all the technical details of his proposal, but just think theoretically here:
A sidechain which works perfectly like Monero is introduced, what are the consequences?
(1) people who send BTC in the "ring signature sidechain" (RSSC), taint their BTC who are not entering the RSSC. If their identity is matched with the same identity as who put BTC in the RSSC, this person can become "flagged".
(2) people can transact within the RSSC anonymously. This has value. (The same value as transacting in XMR).
(3) people who want to get their BTC out of the RSSC, immediately taint those BTC. It's even easier to taint these BTC than BTC put through a mixer or using coinjoin because you don't need to do extensive chainalysis. If/when regulation starts to come down on payment processors and/or miners (see
my reddit post about fungibility for more info on the risks of tainting your BTC), these BTC's will be hard to spend in the 'regular economy' or even transact with.
People probably want to avoid (3) happening, so they keep their BTC in the RSSC. But this has disadvantages too, your BTC are locked in this particular sidechain! If another (better) sidechain comes out, you can't migrate them (or maybe you can, don't know if the sidechain proposal allows settlement directly on another sidechain or not). Also, if miners and/or nodes stop supporting the 'obfuscation sidechains' like RSSC (assuming they even wanted to touch them in the first place), you can't even use the transaction system (2) and your BTC became worthless in an unsupported sidechain.
Why risk all that and not just buy XMR? you can always dump them if the market is starting to switch towards another (better) anon cryptocoin?
