I gifted $ 20 of Bitcoin to Janet Yellen via Biterica. Her gracious response and more background below.
You’re welcome, Janet. Thanks for keeping an open mind!
There is a Taoist story of an old farmer who had worked his crops for many years. One day his horse ran away. Upon hearing the news, his neighbors came to visit. "Such bad luck," they said sympathetically. "May be," the farmer replied.
The next morning the horse returned, bringing with it three other wild horses. "How wonderful," the neighbors exclaimed. "May be," replied the old man.
The following day, his son tried to ride one of the untamed horses, was thrown, and broke his leg. The neighbors again came to offer their sympathy on his misfortune. "May be," answered the farmer.
The day after, military officials came to the village to draft young men into the army. Seeing that the son's leg was broken, they passed him by. The neighbors congratulated the farmer on how well things had turned out. "May be," said the farmer.
I get pretty mad at life sometimes. Seeing the all the pain and suffering going on. Knowing that greed is the cause of almost everything in this world. If bitcoin can take away power from those who make evil decisions then I am in. You can go protest. Nothing will happen. Post on Facebook how everyone should start loving each other again. Nothing will happen. Unfortunately, evil has ruled from some time. I think Bitcoin is the first legit thing I’ve come across that is effectively…
Figuring a Sidechain blockchain that has high capa and low confirmation time like ETH for example. Call this sidechain "RSK" (rootstock) for example.
High capa means lower decentralization and lower RX fees. 2-way peg with BTC means 1 mRSK = 1 mBTC.
Assume adoption increases, so TX fees on Bitcoin increase further. People will start buying mRSK with fiat directly, so they save the bitcoin network tx fees. RSK will have same utility as BTC except lower TX fees, i.e. higher utility after all, as it used to be when fees of BTC were still low.
But most Bitcoin in circulation is still on BTC not RSK blockchain, so RSK shortage, hence RSK price rises due to increasing demand. So does BTC price, due to the 1:1 two-way peg.
Some people earning many mRSK will turn them into mBTC via 2-way peg on-chain for savings purposes – Bitcoin is more secure than rootstock blockchain, but only if it is worthwhile, because otherwise Bitcoin TX fees are too high.
People who still have Bitcoin savings on an exchange and want to buy a coffee from that will turn some of their mBTC into mRSK. But not via 2-way peg, because that is too much TX fee. Instead, they swap them on the exchange, off-chain, because that is much cheaper for small amounts! Only for big amounts, using the 2-way peg is cheaper.
Market forces and arbitrage will yield a balance of exchange rate near 1:1 on the exchanges, a suitable TX fee on BTC, a suitable TX fee on RSK, and a suitable amount of RSK in circulation, and a suitable mRSK price = mBTC price
The new crypto coin of utility is RSK.
The security of RSK is about the same as the security of Bitcoin Unlimited would be with the same blocksize and capa.
BTC has highest security because of high decentralization due to still small blockchain, while being the backbone for the much more powerful (utility!) RSK network.
Exchange between RSK and BTC can happen on-chain via 2-way peg or off-chain on exchanges, where x-rate will be close to 1:1, because otherwise arbitraging using on-chain 2-way peg will avoid too much deviation of 1:1 exchange rate.
People get used to using mRSK like cash in earlier times for spending.
People get used to using mBTC like bank deposits in earlier times for saving.
People get used to transaction fees when changing between mBTC and mRSK, like ATM withdraw fees in earlier times.