A 22 October 2014 white paper on cryptocurrency sidechains formalizes and advances the innovative sidechain concept and examines pros and cons in terms of both technical and economic factors. The current reply focuses on likely general factors in market valuations of bitcoin-pegged units on sidechains. This is an important topic for clarification as people begin to imagine and work to develop practical uses for sidechains. Assuming that the two-way peg will necessarily assure a matching, or even consistently discounted, market price relative to bitcoin could prove unrealistic. A scenario of independent floating market prices among sidecoins could prevail, with implications for the scope and types of sidechain applications.
Download the seven-page PDF of “Sidechained bitcoin substitutes: A monetary commentary.”