Paul Sztorc made this video about how blockchains can interact destructively.https://www.youtube.com/watch?v=2OOKgTSrITs&list=PLw8-6ARlyVciMH79ZyLOpImsMug3LgNc4
His central argument: when miners allow the creation of a sidechain, they need to use the same caution as a soft-fork.
Support for this argument:
* Since oracles are paid by trading fees, sidechains create a free-rider problem. Participants on the sidechain can bet in hivemind markets without paying fees.
* It is possible to make a sidechain for stealing bitcoins from the main chain.
His arguments apply to alt-coins in the same way they apply to sidechains.
It is impossible for bitcoin miners to stop someone from creating an altcoin.
At this point it would seem that blockchain prediction markets are an impossible goal.
Anyone can make an altcoin to ruin it for everyone.
Read a little more, hope is not lost.
=== Focusing on the "free rider" problem.
Paul has previously claimed that hivemind will solve the free rider problem in general. He talks about it on page 14 of the applications document: http://bitcoinhivemind.com/papers/3_PM_Applications.pdf
Here is a meme illustrating Paul's contradictory claims.
Flying Fox is being designed under the assumption that Truthcoin dominant assurance contracts do solve the free rider problem. So we don't collect fees from gamblers at all. Instead, a dominant assurance contract is used to raise money to pay the oracle to make a new market.
===Focusing on the "sidechain steals 1% of coins" problem.
If bitcoin was a flavor of delegated proof of stake consensus, like Flying Fox, then the sidechain attack to steal 1% of the coins would fail.
If some miners started participating in an attack like this, the users would stop delegating power to those miners.
Ambiguity isn't enough to protect the miners.
Users will demand the miner include a transaction from the designated frozen list. Failure to comply means the miner will lose their power.
Even if there is only a 10% chance that a miner is participating in an attack, that would be enough justification for people to stop delegating power to that miner.
Paul has made a very convincing argument for adding DPOS characteristics to blockchain consensus.