Subject: Re: [bitcoin-dev] Coins: A trustless sidechain protocol

From: ZmnSCPxj <[email-masked]>
Date: Fri, 17 Jan 2020 13:54:50 +0000

Good morning Robin,

> Hi Joachim, 
>
> > if anyone can halt operation of a sidechain with just tiny investment.
>
> It'll be impossible to halt a healthy chain with a tiny investment because halting a chain costs you at least as much as the side chain rewards. The "invested time value per block" of all honest stakers converges against the block reward. If imbalanced, someone will stake more bitcoin to get the cheap sidechain rewards. Exactly the same market mechanism secures PoW.
>
> For a decentralized consensus via resource consumption it doesn't matter which limited resource you consume. The only relevant factor is that the value of the block reward is sufficient to motivate people to invest a lot of that resource. To motivate them to invest so much that an attacker cannot invest more. Independently of the resource, the amount of honestly invested resources converges against the value of the block reward.

Also known as MC = MR.

This is in fact the core of the argument *against* this kind of global microchain system: each individual chain will either:

* Pay ridiculously high fees per transaction, because the microchain has a small number of transactions because that is the entire *point* of microchains.
* Pay insufficient fees per block, making it easy to attack, meaning the security of the chain has to be centralized around a few actors anyway (e.g. checkpoints, like what every altcoin implements), which is not much better than the custodial case you are complaining against.

In order to have a sidechain that is as secure as Bitcoin today, you need:

* Sidechain fees to cover both *current Bitcoin fees* plus *current Bitcoin block rewards*.

Consequently, the sidechain has to have either *more* users than Bitcoin today, or *higher* fees than Bitcoin today.

Unless of course you propose to have the sidechain issue its own coin, in which case it is not much more than an altcoin.
Still, the real-world value of the total block rewards for that altcoin will have to match the real-world value of the total block rewards of Bitcoin in order to have security even approaching Bitcoin.

>
> Thus, I would even go further with my claim and argue that the security of bitcoin-backed PoS is exactly as strong as PoW because in both cases their security is proportionally to the dollar value of their block reward. PoS sidechain security depends only on a sufficient userbase and thus, block reward value.

Only if the consumed resource matches what is consumed under PoW.
Otherwise it is not much better than a low-PoW altcoin, i.e. easily attackable unless it centralizes around the developers.

I understand the desire to smoothen the experience of onboarding new users to Bitcoin.
But this path is not much better than the custodial solutions you are trying to avoid anyway.

Regards,
ZmnSCPxj