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How can you free yourself from the technical limitations of Bitcoin if you're a sidechain? Please explain this.
Also how do developers make money from the process? How does crowd funding take place?
A sidechain is a completely different blockchain. For example say enough people want to have faster confirmation times than the 10 minutes from bitcoin, then a 2.5 minute litecoin like sidechain can be created and there can even be a different token amount based on a preprogrammed exchange rate. For example every bitcoin locked into the lite-side-chain-contract would issue 4 lite-btc on the 2,5 minute block confirmation sidechain.
There are many, many ways to fund development even outside of internal revenue of the sidechain. Pumping and dumping or premine are not the only "solutions". Developers will have to work out for themselves how they intend to fund themselves or if they even want monetary compensation for working on interesting ideas (just making bitcoin more useable and valuable could be enough compensation for some). They could code it in directly via a percentage cut of transfer-fees or at the moment of issuance of the new chain btc-pegged-tokens. There are other ways they could raise funds outside of the chain itself, by collecting bounties from interested parties or by working for companies that need something that can be done more easily on a sidechain than on the bitcoin main-chain, say for example companies wanting to do smart contracts and hiring devs to develop and maintain a turing-complete contract sidechain. (That last possibilty seems to have affected Ethereums project lead V. Buterin most of all, judging by the amount of posts on the bitcoin subbreddit about this 2-way-pegging and apparently him feeling the need to defend the worth of his project.)
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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.
Good or evil? According to whom? From the point of view of some bitcoin devs and Dr. Adam Back alt-coins are seen as diluting, distracting and shameless copy-cats with evil intentions by not wanting to contribute to bitcoin and even a threat to the very survival of the idea of cryptocurrencies. One major fear seems to be that if bitcoin were to be replaced by an alt-coin that would be a terminal blow to the credibility of the whole concept and make any crypto-coin replaceable and therefore unreliable in the eyes of the general public. Admittedly I myself was bothered by everyone using the bitcoin2.0 term and think that it was not very clever to try and make bitcoin sound inferior without realizing that this just sets you up to be bitten in the ass when the next alt-coins come along happily naming themselves bitcoin3.0 or bitcoin.ad-nauseam. I did not expect however that this project announcement would make all bitcoin2.0 alt-coins sound petty and inferior to bitcoin overnight. Personally I think that bitshares should try to distance themselves from the 2.0-gimmick as much as possible, especially since I don't think we can confidently say we've even reached anything close to the 1.0 version of bitcoin yet.
At the moment I'm not convinced that Dr. A. Back is an evil person. His motivation seems to be to enable free experimentation and development, but in conjunction with bitcoin instead of in competition with it, and he also sees it as a way to get rid of scam-like pump and dump schemes, because these sidechains are pegged to bitcoin and completely voluntary. But even if the developers are not evil, that does not mean that they have spent enough time working out all possible bad effects this could have, because that tends to be a blind spot for people focusing on new technology and possibilities.
As to why developers would want to contribute, that's almost as impossible to answer as the good vs evil one. You could just as well ask why wouldn't developers want to play with this. The ability to try out new things which are difficult in the current design of bitcoin, but without the need to set up a completely new alt-coin community plus things like exchanges and such, is plenty motivational by itself.
I've suggested this before, but I think you'll get better answers if you listen to the interviews with Dr. Adam Back that are published online and read the discussions on reddit, bitcointalk and maybe even the discussion about two-way-pegging on the bitcoin-mailinglist. I don't think it's wise to base your point of view on the judgement of others and especially not on someone as deficient as I am.
Personally I think this is a very ingenious concept and could make bitcoin better/more useable than it is now. I'm also not that convinced about the good intentions of people behind a lot of alt-coins, so I'm not that disturbed by their possible extinction. This unfortunately also includes projects like Ethereum where imho some very, very disturbing things have been uttered by smooth talking individuals, but that could just mean I'm evil for not separating my pov of the project because of those statements, that very possibly might be in direct opposition to the intentions of a larger less vocal and hopefully far more influential part of the team. So again I urge you to seek out the information yourself until your confident about your ability to make a judgement. That way you'll be better equiped than I can be, my abilities in this regard are limited to put it mildly.