Side chains and Ethereum

I am sure this topic must have been discussed a number of times.

Will be great to see what the community thinks about how the two will interact.

What are some of the use cases around how the world of Bitcoin and Ethereum will interact via side-chains. Does it even need to ?

Initially I thought it could be a way to secure the network strength/security of Ether (or other tokens issued within Ethereum contracts) by pinning it to the bitcoin network via side-chains. But Vitalik’s comments in some threads from last year provided added clarity on how the two might interact:
“It is definitely possible to implement Bitcoin side chains inside of Ethereum contracts. Our general philosophy is to relegate all "currency experimentation" on the Ethereum platform, whether that's basic income coin, a SchellingCoin-based USD-tracking coin or BTC-pegged coin to contracts, and keep ether as ether; we feel this is the best simple approach to keep the system stable and minimize complexity risk and black swan risk. Having a Bitcoin side-chain inside an Ethereum contract can potentially be quite powerful; it allows you to very easily do decentralized exchange between bitcoin and ether (as well as other Ethereum assets) via the ETH -> contract BTC sidechain -> BTC pathway.”
Ref: http://www.reddit.com/r/Bitcoin/comments/22na59/sidechains_the_coming_death_of_altcoins_and/

What do your thoughts?
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