Bitcoin Blockchain Innovation: Sidechains
At first glance, sidechains may seem like another layer of complexity that is best left to the professionals, but they can make blockchain tech more accessible and customizable for developers who want to explore different possibilities and applications for the Bitcoin blockchain. Sidechains also allow for alt coins and Bitcoin to scale- remember Lightning Network?
They could also one day allow for cryptos to interact with each other, thus opening the door for so many possibilities.
Understanding Blockstream
Blockstream funds the development of Bitcoin Core, which is the main Bitcoin network client software.
It is a blockchain technology company that also boasts as being the originator of side chains.
Whether or not that’s true, they were at least one of the first and still a major player that is pursuing this big idea.
Let’s break down what a sidechain is.
In laymen’s terms, sidechains run parallel to a main blockchain, like Bitcoin’s blockchain for example. They use a two-way peg, meaning you can move your Bitcoin from the main Bitcoin blockchain, to the sidechain, and then back again. This is done by essentially locking away your Bitcoin from the main blockchain while it is in use on the sidechain, and they are then released once you prove they are no longer being used on the sidechain.
The first side chain is called Elements Alpha.
It is a testnet where developers can utilize the open source code to contribute to the project and discover ways to improve the Bitcoin blockchain.
Other projects for side chain implementations include the likes of Rootstock.
The developers at Rootstock, or RSK have announced at Consensus 2017 the release of Ginger, which is their open sourced testnet.
Ginger is aimed at providing more functionality to the Bitcoin Network like smart contracts, increased scalability and a new revenue stream for miners.
As always in crypto land, it’s not always sunshine and roses, there are still some kinks to work out with side chains until they can be considered ideal.
One of the arguable weak points of sidechains is the fact that federations are a select few who ultimately call the shots and determine if/when the coins you use between the main blockchain and the sidechain are locked up and released.
This is a centralization of the whole system, and whoever is behind the sidechain will determine who is included in its federation.
Trusting a dozen or so individuals to authorize all transactions can be seen as a major security flaw.
One other weak point is the fact that sidechains will need it’s own miners.
This could pose a problem when considering that these miners will need to be monetarily incentivized.
One way to fix this is by implementing merge mining.
"This is the process of allowing two different crypto currencies based on the same algorithm to be mined simultaneously.
This allows low hash powered crypto currencies to increase the hashing power behind their network by bootstrapping onto more popular crypto currencies."
I’m sure that there are Bitcoin maximalists out there who see this development of side chains for Bitcoin as a nail in the coffin for Ethereum. Sidechains have the potential to provide Bitcoin with the ability to integrate smart contracts, because of this, it does seem to take an edge away from Ethereum in terms of services provided.
However, I will always believe in the robust development team behind Ethereum and their ability to work together to constantly produce innovative new projects.
So don’t say goodnight to Ethereum.
Instead, I’d like you to consider how side chains can open the door for different cryptocurrencies to work together and take advantage of their strengths.
Additional Reading/Sources:
Blockstream
Sidechains Explained
TechCrunch Article
Elements Alpha
Rootstock (RSK)
Peter Todd Talks Sidechains
Always quality content from you Heidi! Good job! When's the next Steem or Zappl focused episode? :D
Very nice information, thank you.
My husband and I always appreciate your relatable and down to earth reporting reporting.
Too bad Blockstream's revenue stream - and the use of sidechains in the first place - is dependent on Bitcoin mainnet remaining crippled. Side chains might be really useful, especially with projects like counterparty and rootstock. I am more exited about cross-chain interoperability.
Very good explanation for this subject that is somewhat complex.
I had not seen your blog. It's really great, and you know a lot about crypto too. I think I'm in love hahaha
Followed, suscribred, upvoted and resteemed!
This is so complex for me right now, because Im still learning, but you make it easy thanks to your great info, videos and posts.
It's pretty simple actually. BIG money is pouring into the crypto sector right now so new Silly Con Valley born offshoots are springing up faster than spring vegetables in most gardens across the country. As long as bitcoin holds interest amongst the algorythmic money changers it's blues skies and sunshine. That means everyone here needs to keep buying bitcoin just to make sure that "the bigwigs" all know that you investors are still gullible...I mean, interested enough to keep hope alive. As long as you keep buying they'll know you want them to "Rejigger the current system to make it better...so we can make even more money." That's all Heidi was trying to say. :-)
Thanks for the Info. I'm almost brand new to the cypto sector!! Just 3 months
No problem. There is a lot to watch out for. Most of the bitcoin advocates will tell you that bitcoin can't be manipulated. Heidi did a Utube post about that actually. Can't be further from the truth. Biotcoin is a low float (because many long term holders are simply holding...they can't lose unless price drops to $20) so that means the very few coins that are being swapped on the open market each day are very easy to control pricewise. Do a little bit of internet research. Wall St is now involved. I have psoted about 5 or 6 items here at steemit "proving" that there is manipulation of price via strategic buys and sells. Plus getting in and out is "obviously" a big pain. You can actually trade bitcoin right now if you have an online brokerage account that let's you trade OTC stocks. The U.S. equity exchange traded "bitcoin tracker" is gaining more popularity every day. Trade volumes are picking up. It offers the same overall returns and even beats actual bitcoin at times (I posted a buy advisory today that generated a 8%+ move in 2 hours). So you decide. Do you want to jump thru hoops to trade actual bitcoin...and "hope" your exchange is there to take your sell order as price is dumping $100 in 5 minutes? Or do you want out in 5 seconds with this? :-)
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=gbtc&x=57&y=21&time=18&startdate=1%2F4%2F1999&enddate=2%2F18%2F2017&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=8&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=9
It's mindblowing to me that women like @heiditravels and the DASH girl do all this research. Is crypto THIS revolutionary or are other women just lazy? haha
Keep up the good work, you certainly will introduce new people to cryptocurrencies like this!
Allow me to introduce you to @beanz ;)
It's like the "girls can't do math" syndrome, Crypto's are viewed as complex men things, it may take a while but a few more girls are entering the ring!
Um, hello.
Thanks for the shout out Heidi, there are much better examples than me of women in the crypto space. @mrs.steemit for example probably knows more of the technology than me.
But as for laziness, no I don't think that's it. It's just a part of an industry that's always been dominated by men. I have plenty of male friends, some programmers even who are just not interested in learning about it. Some people just don't find an interest until everybody's talking about it, and male dominated industries have been uninviting to the majority of women especially in spaces that involve anonymity.
Sweet of you to mention me, but I truly think we all are just curious women. Curious about the future, caring about the world and environment we live in and seek knowledge accordingly.
Just like the internet, once it will be adapted by the mainstream market, it won't be seem "special" any longer. In general females are more risk-resistant and rather afraid to try new things, than men. But who knows how that might change in the years to come. Can't wait to see you all again at Steemfest 2 :)
Thanks for posting. Recently watched some of your videos and liked it.. following!
great....resteem and upvote for you.....
Understood the concept - let it be sunny & rosy as often as possible :-)