"Side chains are Bitcoin's inflation model. They enable those who do like, want or understand scarcity to undermine Bitcoin and slowly erode its value.
This should be expected. None of the developers have a strong understanding of economics, and in fact, they believe that it is irrelevant. This is how the groups who want inflation gain control. A slow, insideous cancer that changes Bitcoin from the hard money system it is and into something the powers that be know, understand and can control.
SegWit today... seigniorage next..."
A little-known aspect of sidechains is the ability to map differing amounts to an initial transaction. When you make a payment for instance into a bank and they hold 10% capital reserves they are able to issue $10 for each dollar you deposit.
The consequence of this, is that as sidechains become more widely used and linked into lightning, the restricted That is remaining within bitcoin lives bitcoin as just a swift like settlement network. Parties using the increased capacity side-chain are linked into payment providers that can expand the amount of currency on offer. Although the settlement occurs against bitcoin, this mirrors the scenario within the Swift network. Settlement across organisations can be completed across sidechains.
This ability to use and implemented leveraged position allows sidechains to create a fractional reserve system within bitcoin.
there are ways of ensuring that it would not create inflation by having a direct mapped reserve banking system. This would be similar to Rothbardian full reserve bank or one on a hard money currency as suggested by Fisher in the 1930s
Each side-chain could set its own rules and banking organisations would be able to set up rules allowing for fast interactive credit tied to an amount of bitcoin
The gold reserve system that was in place until it was shut down by Nixon held 5% of the actual gold maintained on the ledger. For every ounce of gold the system had inflated an additional 19.
That was supposedly a hard money system and we see what happens with those
o be effective lightning ends up tying up funds. It is not so quick and easy to pull money in and out of the system when fees are high. In particular, when there are long-term payment channels this becomes even more difficult. The network in effect becomes a credit system
