[quote=“Sentinelrv, post:1, topic:2196”]So I keep seeing all these articles popping up in r/bitcoin about how sidechains will replace altcoins and bitcoin 2.0 platforms. I don’t know anything about this, so does Peercoin have anything to fear from this, since we’re based on proof-of-stake instead of proof-of-work? Here is one of the articles…
No need to worry I say. Side-chains will be merged mined by Proof-Of-Work miners and the mathematical movement of coins from one chain to the other (which I think is an excellent idea) in atomic operations. This implies that Bitcoin still suffers from using PoW and that the side-chain will also be using PoW, so neither the side-chains or the main-chain will compete with what Peercoin does.
I even want to go as far as arguing that in terms of decentralization, side-chains are a step in the wrong direction. Since the chains will be merged mined, Bitcoin miners will be even more powerful. Now Bitcoin miners will get revenue from even more transactions and if something goes wrong with the main Bitcoin chain the effect will be more damaging.
Just think about it… tons of new alt coins is born and dies everyday, but Bitcoin is not affected by this. But, if we have tons of new side-chains being born and then suddenly something goes wrong with Bitcoin main chain?!
Okay, so this guys are really smart and knows crypto. They are smarter then me and know more things then me. Still, I think they are just so very wrong about the importance of limiting the Bitcoin supply. That’s basically what the whole side-chain is about, capping the supply of coins. They want to cap the supply of coins to create scarcity, because it will ensure that the value of the units powers highers. Personally, I think it is up to the market to decide what value a coin should have. If there are many competing coins, this is good because it will force the technologies to compete with one another. If we only have Bitcoin, there is nothing to compete against, only the miners trying to compete and fight over market share.
The thing about crypto currencies that I think a lot of technicians and mathematicians simply don’t get, is that crypto currencies are as much about economy as it is about math and tech. Why in the world would we want only one currency, that if it fails bring down everything? What I want, is distribution of power.
Anyway, side-chains might kill some PoW alt coins that tries to compete with Bitcoin. I’ve personally sold all of my litecoins and bought peercoins instead and when reading about side-chains, I can only think I did the right thing. Litecoin is typically the kind of alt coin that could die now, since they will offer basically nothing that Bitcoin does not have (a lite-side-chain could offer faster tx propagation). If more alt coins implodes because of this, then there is more money that will be diverted to Peercoin.
My take on it, is that side-chains are a good thing for the price of Peercoin. Oh and one more thing, Bitcoin side-chains can not create new bitcoins, so the Bitcoin side-chains can not compete with Peercoin in that way either.
Disclaimer: I might be totally wrong about everything, because I really do not have a clue about what I’m talking about.
EDIT: I’m not bashing side-chains and saying that it is all bad. I think it could be useful. Maybe Peercoin could use a side-chain which deals with anonymity or something. Instead of implementing stuff like that on main, it could be created on a side-chain where that kind of stuff could take place.