Some people believe that altcoins existing at all is a type of inflation. They want 21 million units of cryptocurrency to exist and for us all to be locked onto the Bitcoin pyramid with no escape. I'm not feeling that idea because that to me is almost turning Bitcoin itself into a sort of government where you are like a citizen of the chain and cannot move to or start another country.Totally agree!
Isn't the bare fact that it is possible to create bitcoin copies and improve on them a completely sufficient proof that the currency metaphor is not appropriate but the company metaphor (Bitcoin as a company, http://www.youtube.com/watch?v=ZT9ICMfUDjk) is? Currencies as we understand them and as the coin limitation assumption implies are state issued and because the state issues only one currency which has to be accepted everywhere it is limited in supply - the guarantee that it is accepted everywhere is the only (but sufficient) thing that gives fiat currencies value. On the other side, companies naturally have competition from other companies that try to innovate and improve on the technologies applied by the company that was first. You can call it value transfer network or company I am fine with both terms.
In the end the value of a crypto currency is determined by (magic formula): Technological superiority * Network effect (network effect = degree of innovation (=being the first to introduce the innovation) * success in marketing) = network/company value
I think Bitcoin is actually difficult to put in a rigid category (company? country?). I think for some reason Satoshi intended for it to be democratic. I don't know if he intentionally designed it to centralize around miners like this because it basically creates what I can best describe as an unelected government or hierarchy around the Bitcoin protocol. You have some who have esoteric knowledge and because so few people understand how the code works they maintain power as the developers.
If Bitcoin is a corporation then the shareholders should have ultimate power. Bitcoin is not a corporation in the traditional sense. The miners have all the power.
I think in a lot of ways the Bitcoin social architecture and business model is flawed. It could be more democratic and delegated Proof of Stake is that. It could be designed to resist cartels forming, and if the developers were serious they would move away from ASICs (SHA-256) at least. The fact that they want to bring sidechains but keep the ASICs makes no sense.
Sidechains will give more power to miners, pool operators, chip makers, and core developers. This is probably less than 100 people who would benefit and these people cannot be fired or voted out of their positions. Chip makers as long as they keep making chips will always control the hashing power so that none of us can mine profitably, core developers as long as the knowledge is esoteric will have everyone else depending on them and to go with the sidechain idea would that dependency even worse. None of us know how sidechains will work except for the core developers while altcoin developers can essentially start from scratch and don't have to work with them at all.
Bitcoin in my opinion is starting to look a bit like a country. It now has people trying to create borders. They are trying to maintain control over something which was designed not to be centrally controlled. The problem with inflation in my opinion is a blockchain specific problem. We don't want inflation in individual chains but this isn't the same thing as having many different chains.
The reason I say this is because there is plenty of room for wealth creation in ways other than mining. Most altcoins I admit are trash, but there is also a lot of innovation happening on many different levels. Sometimes the altcoin is just a copy and paste but a community forms around it, starts accepting it, building businesses around it, and over time that altcoin has value. I see no reason to say to people in the altcoin that all value has to be trapped in their chain forever.
Enough rant from me, I just don't like the sidechain idea.
Here is the main thing.... with DPOS we no longer have to worry about bandwidth or disk storage resulting in centralization because there is no longer any vendor lockin, those producing the blocks can be fired, etc.
So I submit that eventually 100 delegates could be elected to host servers with the bandwidth required to process 10K transactions per second.
A sort of democracy is better than a cartel. Cartels are unelected, cannot be fired, and have a monopoly on the power source of the pyramid by controlling the means of production.
In the Bitcoin case they who control the hashing power are unelected. The whole sidechain thing is very suspect. It's like a nation of unelected rulers trying to keep us from escaping by restricting our freedom of movement. Innately I like the fact that there are altcoins because if I don't want to deal with a certain community elite of a particular hierarchy then I'm always free to leave and create or join another.
The freedom to leave is essential. Vendor lock in is what Apple and others have used in the past to try to keep customers. Sidechains seem to be a way for certain people in the Bitcoin community to try to keep a hold of their power (they fear being disrupted).