Lets break this down to the basics at the risk of creating a straw man design:
Step 1) In Bitcoin chain, suspend coins on main bitcoin block chain
Step 2) In Sidechain, verify that the coins were suspended in bitcoin chain using light weight validation.
Step 3) Time Passes
Step 4) In Sidechain, issue transaction that provably destroys coins.
Step 5) In Bitcoin chain, given transaction that provably destroys coins, restore bitcoins.
Assumptions:
1) Bitcoin blockchain is secure and has insurmountable hashpower
2) Side chains only need the bitcoin block headers to validate incoming transfers
3) Bitcoin miners need headers of side chains to validate Step 5
- with proof of stake coins, headers alone may not be sufficient for light weight clients because full block contents is necessary to know who should be signing for each block.
- this means miners will have to rely on some kind of block explorer....
- all bitcoin miners must be able to validate all transactions.... which means that side chains require 51% support of the miners.
Conclusion:
Bitcoin miners determine which side chains get supported.
Bitcoin miners are centralized which means experimentation will be limited.
Miners would have to voice support for a side chain and only allow transactions in/out of the side chain while 51% of blocks are produced by miners that claim to recognize the side chain.
So while steps 1 through 5 sound spiffy in theory, I believe that the only way to solve step 4 to 5 in a reasonable way is to assume that all side chains are also secured by proof-of-work which can be used as the simple, generic, validation measure. This means that side chains must be merge-mining based. I think this is a case of them making bold claims without actually walking through the details.
Is this side chain idea good or evil? I still cannot figure out whether or not it will work or why developers would want anything to do with it.
They are evil in a very fundamental way. And this gut feeling is not about the technicalities (which I do not completely comprehend).
There is a unhealthy concentration of power in the bitcoin community. To me it seems that the 1% doesn't just hold the majority of bitcoins, but also the majority of hashrate, majority vote on development and the majority of media coverage. Of course these people made crypto into what it is today and we should be thankful for that. But I cannot view the sidechain initiative in any other way than as an attempt to concentrate power in the hands of this group. An attempt to canonize bitcoin as the only crypto equity by decree. Which would be a historical mistake.
Look up the 'Luke-JR' episode on the counterparty thread on bitcointalk to see why it is a bad idea to let the bitcoin elite decide on what counts as innovation and what does not.
I'm rather confident that sidechains would cull any innovation that goes against the vested interests of the aforementioned 'elite'. This is bad, because bitcoin is an implementation of a concept. Not the concept itself. And bitcoin is not by definition the best implementation of the concept.
Now, of course, the altcoin environment is full with scams, pumps and predators. But in my opinion it is an environment that enables innovation at break neck speeds. For developers it offers the opportunity to monetize an idea. For speculators the opportunity to make a quick buck. For miners to hit a gold vein. For investors to browse for ideas that they think will be valuable in the long run.
And heck, it works. New algorithms, new distribution models, new mining models, new 2.0 models, new marketing models, hitting the forums on an almost daily basis. Made possible by independent development and speculation.
Most of these new ideas will go down the gutter of crypto-history. But some have already made an impact, and some may in the future.
Crypto needs wild, uncontrolled evolution, and it needs serendipity. Alt coins do that. To call them a distraction is beyond stupid to such an extend that I don't have a word for it.