Topic: Bitcoin sidechains available today? (Read 343 times)

Honestly, I didn't know about that earlier. Thanks for clarifying this. The CT privacy technique and instant transactions is what's most interesting about the Liquid federated sidechain. Considering that validators are known entities, they can easily be sued if they act maliciously within the sidechain. That's why Peter Todd claims that "Liquid is secure under legal-based assumptions". It's a pretty smart move from Blockstream in order to bring legitimacy to Bitcoin as we know it. I believe that a sidechain like "Liquid" would prove to be extremely useful for instant trading of Bitcoin to other crypto assets (or even Fiat).

There are many other sidechains available which make use of the Bitcoin blockchain for security/reliability. A good example of this is "RSK" which is a smart contract platform like Ethereum leveraging the security of the main Bitcoin blockchain. As much as I'd like to see more sidechains emerge over time, this is something optional than necessary for Bitcoin. The main Bitcoin blockchain works as intended providing censorship-resistance to the world. Sidechains are only needed for "scalability" and nothing else. If the need arises, mainstream businesses would devise their own sidechain solutions in order to extend the functionality of Bitcoin for everyone to enjoy. Just my thoughts

liquid doesn't leverage bitcoin's security. it's a federated chain currently secured by 35 members. 51% of the validators could technically collude and steal funds on the liquid sidechain.

that's unlikely though. its security guarantees are obviously pretty strong.

the most interesting thing about liquid (aside from instant transactions) is CT---output amounts and the number of participants can be hidden on-chain. so, better on-chain privacy guarantees vs bitcoin.

i'm curious what liquid transactions cost for end users. presumably they are very cheap since bitfinex charges nothing for liquid withdrawals, but i wonder what the required fee is (if any) when you send L-BTC from your own wallet. https://blockstream.com/2019/07/05/en-liquid-arrives-on-green/

it all looks pretty appealing for short term/day-to-day usage. liquid even integrates with stablecoins like tether too.

I agree. I think satoshi spoke about sidechain in one of his posts. He is/was most likely in support of it. One would wonder why some are against sidechains/segwit/LN whie satoshi wasn't against it.
 Sidechains should adhere to Bitcoin principles though. Or they should be properly rated, so people can choose to use or avoid what is safe for them

This makes sense. After all, not everything is about decentralization/censorship-resistance. Depending on the situation/scenario, centralization is needed to make a sidechain function as intended. For mainstream companies or businesses, a federated sidechain is the ideal path to take. Blockstream found out a profitable business venture with Bitcoin by launching a sidechain of its own that would leverage the security of the main Bitcoin blockchain while increasing transaction speeds. Other companies could create different sidechains that would rely on Bitcoin's underlying security in order to provide unique services or features to their customers.

For once, I've thought that the Lightning Network was a sidechain but it's basically an "off-settlement" system that relies on Bitcoin's blockchain to open/close a channel. Of course, the LN still leverages the security of the main Bitcoin blockchain but it's not exactly the same as a real sidechain. In the end, Bitcoin will always be "Bitcoin" no matter how many sidechains are created by companies, businesses, or individuals alike. The concept of a "sidechain" is only meant reduce the burden on the main Bitcoin blockchain in order to make the pioneer cryptocurrency scalable for the whole world to use. But they're not essential for Bitcoin's survival/longevity within the mainstream world, as the most important thing is decentralization/censorship-resistance above anything else. By all means, Bitcoin can still function as intended without scaling to thousands (or even millions) of TPS. But it depends on a person's (or company's) point of view. Just my opinion

different use cases call for different security models. i don't think we should view different security assumptions as fundamentally good or bad. they are trade-offs/compromises. i think what peter todd is saying here is very true:


this guy puts it aptly:


the ideal is to have lots of different solutions for transaction throughput with different security trade-offs that function at different costs.

in that sense, layer 2 should function as a marketplace of different protocols.

Interesting. For once, I've thought that the LN was a sidechain. But now I understand things more clearly. It's more of a delayed settlement system than anything else. After all, transactions are performed "off-chain" to be broadcasted to the Blockchain at a later time. Still though, I sometimes wonder the level of security of the LN as it used to experience a DDoS attack a couple of years ago. I guess that the LN sacrifices security over scalability/convenience for the end user (but at least it's better than increasing the block size on the Blockchain).

I'd imagine how sidechains will survive in the long run, especially when some rely on third parties. Blockstream's Liquid sidechain is known as a federated sidechain, which could be easily susceptible to external attacks. We need to eliminate the centralizing factor of the middleman if we want sidechains to work as intended. Even so, I believe that sidechains are rather unnecessary for the mainstream adoption of Bitcoin since Satoshi intended it to be used only as a financial system than anything else. Complicating things even more by implementing additional functionalities, would make matters worse.



That's certainly true, mate. Federated sidechains are a "no go" for the future of Bitcoin as a mainstream cryptocurrency for daily payments. They provide centralization above anything else. With centralization, comes security risks too. It's much easier to perform 51% attacks on these sidechains than on the main Bitcoin blockchain. I guess that sidechains are no useful other than serving as a private ledger for companies and businesses to do as they wish. People would prefer to deal with the main BTC blockchain than using any other alternative. Security/reliability/censorship-resistance goes above anything else. Over time, we'll be able to determine if sidechains are able to live up to the task or not. But I hardly doubt they'll be successful in the long term.

Obviously. I have extensively pointed out how the same is true of bank payments that have already gone through interbank settlement. A court may be able to compel a new payment to be made; they cannot reverse the original one.


They can seize your bitcoin wallets and liquidate them, legally. If you hide/encrypt them, how is that any different than lining the floorboards in my house with cash, or holding bank accounts in other people's names?

If the courts can't find my money, they can't compel me to pay a judgment! This applies to all assets, not just bitcoins. None of this proves your claim that settled bank payments are reversible.


This is all a straw man argument you're constructing. I am not arguing that a state cannot seize a bank account!

This is my argument: A court ordering someone to pay damages, or seizure of a bank account, is not a reversal of the original payment.

When someone says "Bitcoin transactions are irreversible," they mean that transactions cannot be removed from the blockchain. In the same way, a court compelling someone to pay damages does not remove the original transaction from the banks' ledgers.

Here's a way to make this particularly obvious: Court judgments are generally paid by check or bank wire transfer. In the case where a defendant is compelled to repay the plaintiff due to an erroneous Visa charge, the repayment would be done via a completely different payment method. Arguing that the original payment has been "reversed" (removed from the banks' ledgers) is therefore absurd. The defendant received a transaction and was later compelled to send a different transaction.

Your fundamental argument is, "Bank payments can be refunded after the fact. Therefore all bank payments are reversible forever." Let's again apply to this to BTC in a simpler example: I send you some bitcoins. You send the bitcoins right back to me. Based on your logic, the original transaction has been "reversed" when in fact, both transactions will remain on the blockchain forever. You are conflating "reversals" with "refunds" and this is a very important distinction. There is good reason why people say that "Bitcoin is irreversible" instead of "Bitcoin is non-refundable."

Bitcoin is obviously refundable. So are bank payments. That is all you've proven!


This is really getting quite absurd. Chargebacks are reversed transactions.

Until final interbank settlement occurs, chargebacks can occur. After interbank settlement occurs, transactions are irreversible.


No. As a cardholder, you actually legally lose the right to dispute transactions after a certain period of time. Under the Fair Credit Billing Act, you have 60 days to dispute a credit card transaction. After that, you lose all legal protections. Under the Electronic Funds Transfer Act, you have only 2 days to dispute a debit card transaction before becoming liable for up to $500 in fraudulent activity. After 60 days, the bank has no obligation whatsoever to hear your claim.

Furthermore, Visa and Mastercard enforce 60-120 day time limits for disputes in their cardholder agreements, which cardholders have already contractually agreed to. After these settlement windows expire, you have no legal basis to hold Visa/Mastercard or your bank liable for billing errors, processing unauthorized charges, etc.

So, there is actually no legal basis whatsoever for what you're saying. You're just claiming that a bunch of stuff would happen, when it actually wouldn't.


Again, nobody is disputing that banks hold custody of account holders' money. What I am disputing is your claim that banks can arbitrarily steal each other's money ("reverse transactions") after final interbank settlement has already occurred.

Squatter

If a court decides that bitpay charged me incorrectly , in a bitcoin transaction,  that transaction cannot be reversed. A judge can't even force bitpay to make a  new transaction
 A judge may force bitpay to disappear,  but not to make a transaction.

If a judged decide that I must pay 0.1 btc to bitpay, I cannot be forced to do so
 They may sell my house,  but can't touch my btc.

However,  if I own 10bucks in a bank account a judge can force the bank to make the transaction.

This is what you couldn't "decypher"

On the other hand, chargebacks really have  nothing to do with transaction reversibility. As I said, it is a value that the whole banking system arbitrary  decided not to  correct their own mistakes.

120 days is not a technical reason, but merely convenience
It is convenience because a judge can determine the bank to pay for that chargeback even if it is years old.

When I have more time I will look for more information regarding reversibility in bank transactions.
Actually,  like the russian example I gave you, banking transactions are happening elsewhere, not in our account directly (the russian money went to the bank, but not to antonopoulos account).  They are basically a custodial service.

In the mean time, try to find your terms and agreement you signed when you opened your bank account.

It is not arbitrary. All financial institutions in interbank settlement systems contractually agree to the same final settlement conditions.

Some payment methods have far shorter settlement windows. Wire transfers can be permanently settled within minutes or hours. If you are defrauded into sending a bank wire that was settled through Fedwire, there is no way to reverse it. Your only choice is to pursue the fraudster in court and hope you can get a judgment forcing him to pay you back.


Go ahead and prove otherwise. That's how bank settlement works. The terms are agreed to by account issuer and account holder. Once final settlement occurs, the transfer becomes irrevocable and unconditional because the involved financial institutions and the interbank settlement system (like Fedwire or CHIPS) all have contractual obligations to honor final settlement.

If one bank customer screwed up and didn't dispute/cancel a transaction in time, nobody cares. The customer needs to pursue justice through the court system. The transaction will not be reversed.


That's not true.

My bank will not allow your bank to steal money from my account just because of some dispute from 1990, as you suggested. You would need to file a lawsuit against me, and at this point, the statute of limitations would likely have run out too.


What does that have to do with reversing transactions? Nobody claimed that the banking system is not based in trust -- completely separate issue. Now you are just conflating "trustless" with "irreversible."

You were claiming that bank payments can literally never be settled, and are always reversible forever. I am disputing that claim.


A judge ordering a defendant to pay damages ≠ a chargeback. It's ridiculous that you would suggest that.

You're just refusing to address my arguments, while repeating (in different ways) that bank payments can always be reversed forever.


I can't even decipher what you're saying. My point here still stands:


We can agree to disagree if you'd like, but I don't think you've even begun to prove your claims. I would reiterate:

Chargeback 120 or 90 days is just an arbitrary value.
Or do you think there is something like a lock time after 120 days, at 8pm, NYC time, that all transactions become irreversible?  What if it is a Sunday, does the lock time goes to 121 or 118 days? That's makes absolutely no sense.

That's just that: an arbitrary value when the bank decides that it will just reverse transaction by a court order (or someone else's order)
As it is a chargeback lol a new transaction

You are comparing bitpay with a bank. You can't.
If a judge determine bitpay has to reverse,  and it doesn't make another transaction to pay for that money, bitpaybwill close it doors. Ok.

But the judge cannot force that bitcoin to go back and forth. Bitpay may decide to never work again and keep that bitcoin for himself.


So, to sum up:
Bank transaction are not irreversible,  even after 90 days. That's an arbitrary value that they won't revise their own mistakes after 90 days.

If you take chargebacks out of the equation, what situations are you even talking about?

You're painting this situation where Visa (or any bank) can arbitrarily reverse payments from years or decades into the past. That's preposterous. No bank could ever trust the validity of any payment, ever, if that were true.

Payments cannot be reversed after interbank settlement occurs because banks do not have the authority to steal each other's money.


The bank isn't "reversing" anything. They are paying the damages ordered by a court judgment. That's an entirely new transaction.

Let's apply this to Bitcoin: If BitPay charged me incorrectly and a judge ordered them to repay me, the same logic applies. BitPay would initiate a new refund transaction, not attempt to reverse the original one. Using your logic, this BitPay refund would indicate that Bitcoin is reversible back to the genesis block simply because past payments can be later refunded. Of course, we know that isn't true.

Hopefully this example shows that refunded transactions ≠ reversed transactions, and that bank payments cannot be "reversed" forever. Sorry to be long-winded, but there is a lot of misinformation around here about how the banking system works. Bitcoin's settlement time (minutes/hours) is drastically superior to Visa payments or ACH payments (months). Can't we just leave it at that?

 
You are talking about charge back, which is a money that the institution gives back to the client due to an error or scam. It is just a limit freely determined by them to keep our money due to their fault.

This has nothing to do with transaction reversibility.
If a judge determine that the bank charged you incorrectly,  for example, that transaction can be reversed no matter how long it was.

Unfortunately, no. Sidechains are much less secure than Bitcoin.

With a federated sidechain, stealing all the bitcoins on the sidechain only requires collusion by 51% of trusted validators. With a drivechain, 51% of miners can collude to steal all funds on the sidechain.


This isn't true. The filing window on chargebacks (enforced by both Visa and Mastercard) is 120 days, maximum. The filing window for ACH payments is 90 days. That's when payments like these can be reasonably considered "settled."

lightning =/= sidechain. it doesn't entail a second blockchain. it's more of a delayed settlement mechanism.

every second layer solution comes with trade-offs, including sidechains. eg 3rd party trust (federated chains) or lower security (merge-mining). merge-mined sidechains can also adversely affect the mainchain in a tragedy of the commons scenario because, as peter todd points out, they are effectively block size increases. in other words, it's a way miners can increase the block size without network consensus.

Exactly. There's really no need to scale the Bitcoin blockchain as transactions are still faster than those performed on traditional payment processors like Visa or MasterCard. Scalability would sacrifice decentralization, which is not what Blockchain technology was created for in the first place. Satoshi intended Bitcoin to be a Peer-to-Peer Electronic Cash System that's free from middleman and counterparty risk. By increasing scalability, you'd have to increase storage/bandwidth requirements which leads to centralization of the Blockchain. In Bitcoin, it's possible to accept zero-confirmations which are broadcasted instantly across nodes on the network. Waiting for further confirmations (which take around 1 to 2 hours) from a transaction is just a preventative measure against double-spending.

With the Lightning Network, the so called "scalability" issues are a thing of the past. It's a layer-two solution for the Bitcoin blockchain (we could say it's like a sidechain) which is isolated from the main chain. In case the Lightning Network fails, the main Bitcoin blockchain will continue to function as intended (unlike on-chain scalability like it's the case with both Bitcoin Cash and Bitcoin SV). The concept of "sidechains" is useful for creating new cryptocurrencies that would leverage the security of the main Bitcoin blockchain. They're pegged to Bitcoin making it difficult (or practically impossible) to perform 51% attacks on them. Sidechains or not, Bitcoin will do fine for the foreseeable future.

What I do not like about sidechains is the introduction of "Federated Sidechains" like Blockstream's Liquid. This model requires a third-party which goes against what Satoshi intended in the first place. Because of the way Federated Sidechains are designed, people will most often stick to the main Bitcoin blockchain for true censorship-resistance. About sidechains on the Bitcoin blockchain, I've found out that they're still experimental. We have a few of them such as Drivechain, Rootstock, and even the Lightning Network itself. There's even Microsoft's decentralized identity solution (ION) built on top of the Bitcoin blockchain. The more sidechains there are on the Bitcoin blockchain, the more its functionalities will expand. Hence, sidechains are good in a way since they extend Bitcoin's capabilities far beyond reach. Just my thoughts

Despite its slowness, the Bitcoin blockchain is currently the safest and truly decentralized, unlike other blockchains. As the creator intended, Bitcoin remains the number one cryptocurrency. In order to increase the speed, you need to sacrifice security, and this contradicts the main idea of ​​creating bitcoin.

Stop. That's another whole debate franky1, one that has been started, fought, and one side forked into an altcoin, and the other continuing on.


Or maybe they believe it's a better design-decision not to increase the base layer, which goes back to the scaling debate.


Lies again?


No one said that it's decentralized. So what, it's a sidechain.


It's early. Let them have their fun.


Bitcoin Cash "fixed" them, but look, no users there too.

No, that's not how it works. Visa transactions, or any bank transaction, can be reverted at any time. You can reverse a transaction from 1990 if the owner of the bank (or visa) wants. He can give you a negative balance as well, if you don't have the money to pay for the reversion of the transaction.

This has nothing to do with confirmation time. When you hear people saying that bitcoin and blockchain are "immutable" , people are talking about this: Bitcoin transactions cannot be reverted. Banks are not immutable.

Visa is by far the fastest method to confirm transactions.

look at this graphic



https://howmuch.net/articles/crypto-transaction-speeds-compared

But bitcoin's confirmation IS faster than current payment methods such as Visa.  Visa's initial approval may be a few seconds, but you can contest a charge for months afterward so it is NOT confirmed for months.  Bitcoin transactions are confirmed much faster than months.  An hour or two.  Bitcoin's initial broadcast to the network is a few seconds at most also.

I do agree though, the scalability drama is just that, drama. 

With Lightning, you can have more or less instant broadcast and instant confirmations.

Most (all) side chain functions can be duplicated faster and cheaper on things like lightning.  Sidechains may be interesting for some uses, but federated sidechains that require trusted 3rd parties aren't very interesting except as experiments.

Don't think about it as if it is black and white. We have the problem of scalability which is a problem that will face Bitcoin for long time.
Currently, there is no problem using Main bitcoin network, especially since it is decentralized, cheap and does not take long.

The problem lies in who wants to use BTC for daily transactions that require speed at the expense of decentralization, and here the role of the side networks can be.

In the future, more solutions will be developed to make the network more decentralized and capable of including more tx/S.