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So I was reading this discussion today and came across this concept:

Monero, Litecoin, Ethereum ... will be Bitcoin sidechains before long, and as there's no additional value to having standalone blockchains, the sidechain implementations will naturally persevere and prosper due to the network effect.

I vaguely grasp the idea of implementing a sidechain. I don't grasp how an entirely different blockchain, such as Ethereum, could possibly be implemented as a Bitcoin sidechain. Is this a real thing that could happen? How?

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The idea is that Bitcoin is agnostic when it comes to any sidechains derived from it. When some coins are brought in from Bitcoin to the sidechain, Bitcoin only sees what it always sees: transaction outputs locked up by an encumbrance script. The other chain must be aware of Bitcoin's blockchain, and from there, the sidechain's rules will see that the coins have been encumbered such that the coins are now issued on the sidechain's blockchain.

So let's say that Ethereum does not issue ether via mining reward, but rather requires you to lock up bitcoin on Bitcoin's blockchain, thus "moving" that bitcoin from the main chain to the sidechain. Now the ether can be traded, payed to a smart contract, or anything else that ether can do on the Ethereum block chain. You can even trade it back to the main chain, thus claiming the bitcoin that was "moved" to the Ethereum chain. The fact that the two blockchains are fundamentally different doesn't matter, as long as the sidechain is aware of the parent, and can handle moving coins back and forth.

You may want to check out this answer for a more in-depth explanation to sidechains.

  • Let's say Ethereum becomes a Bitcoin sidechain. Let's say people want to "move" $100M worth of Ether from the Ethereum sidechain to the Bitcoin mainchain. How exactly would that work? Remember, there was no Bitcoins "locked in" to Ethereum initially. If you change the mining reward now, there is still $1B Eth on the chain without any corresponding Bitcoin... – Atte Juvonen Sep 15 '16 at 21:40
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    I don't believe anyone would retrofit their alt coin to become a sidehain. That would be extremely contentious for holders of that coin. Instead, a sidechain with the same purpose would be created using Bitcoin as the main chain. If it takes off, then the original alt would lose value, as its purpose is fulfilled in a cheaper and more interoperable manner as a sidechain. – Jestin Sep 15 '16 at 21:46
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Practically speaking to transfer an existing chain to a sidechain would be nearly impossible. You would have to transfer all the value of the altcoin to Bitcoin and then to the sidechain. This means that somehow people would sell their altcoin for bitcoin to transfer it onto a sidechain. But how would that work? If an alt-coin was "moving" to a sidechain no one would be willing to buy it. The particular alt-coin community could devise some kind of a scheme to transfer the value, but there would always be unforeseen consequences. (look at the Ethereum DAO-hard-fork fiasco for an example)

Think about it like this: what if a country A decided to get rid of its currency, lets call it A-dollar and instead start using USD. In this case you would tender your A-dollars to the central bank and they would issue and equivalent amount of USD to you. This is only possible (in theory btw) because there is a central authority. How would this work with a decentralized currency?

These are just some high level thoughts, as usual the 'devil' is in the details.

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No major alt-coin will move itself onto a side chain, in doing that they would remove the possible appreciation part of its currency (since on a sidechain, tokens are tied to bitcoins, their value can only go up if bitcoin goes up in value). The possible appreciation is what dirves many a person to put its money into a given altcoin.
Perhaps moving some coins onto a sidechain may make sense, Namecoin comes to mind.
Keep in mind that all you were reading is someone's opinion.

Check out this post for a basic sidechains explanation.

  • I read the entire post you linked to, it didn't answer how another chain - which already exists - could be later implemented as a Bitcoin sidechain. – Atte Juvonen Sep 15 '16 at 21:32
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    An existing altcoin can't "become" a sidechain. That makes no sense: an altcoin has a free floating exchange rate, a sidechain is pegged. The comment is about the technology being reusable as a sidechain, not its currency. – Pieter Wuille Sep 16 '16 at 0:23
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the alt-chain could run multiple different kinds of tokens ... in other words .. just update the alt-chain so that it runs the old tokens the same way while donating its transaction bandwidth to BTC by pegging a second token to BTC .. There is no reason an alt-chain couldn't do that except that the nodes of the alt-chain would have to agree on it. The hard part is not at that location at all ... the hard part is somehow hiding a signature from the public which then is brought forth by the alt-chain operation to make adjustments on the BTC chain. Locking up the BTC is easy ... freeing them in a secure manner is hard. There may be a cryptographic solution to this, but I'm unaware of it. If BTC were simultaneously altered so as to recognize return-to-chain transactions on an alt-chain, then it would be easy.

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