Topic: Cardano: Why These Researchers Think They Solved a Key Piece of the Puzzle (Read 22 times)

https://bitcoinmagazine.com/articles/sidechains-why-these-researchers-think-they-solved-key-piece-puzzle/


what exactly is a sidechain?   

Same Coin, Different Blockchain
A sidechain is a technology that allows you to move your tokens from one blockchain to another, use them on that other blockchain and then move them back at a later point in time, without the need for a third party. 

In the past, the parent blockchain has typically been Bitcoin, but a parent chain could be any blockchain. Also, when a token moves to another blockchain, it should maintain its same value. In other words, a bitcoin on an Ethereum sidechain would remain a bitcoin. 

The biggest advantage of sidechains is that they would allow users to access a host of new services. For instance, you could move bitcoin to another blockchain to take advantage of privacy features, faster transaction speeds and smart contracts. 

Sidechains have other uses, too. A sidechain could offer a more secure way to upgrade a protocol, or it could serve as a type of security firewall, so that in the event of a catastrophic disaster on a sidechain, the main chain would remain unaffected. “It is a kind of limited liability,” said Zindros in a video explaining how the technology works.

Finally, if banks were to create their own private blockchain networks, sidechains could enable communications with those networks, allowing users to issue and track shares, bonds and other assets.

Early Conversations
Early dialogue about sidechains first appeared in Bitcoin chat rooms around 2012, when Bitcoin Core developers were thinking of ways to safely upgrade the Bitcoin protocol.

One idea was for a “one-way peg,” where users could move bitcoin to a separate blockchain to test out a new client; however, once those assets were moved, they could not be moved back to the main chain. 

“I was thinking of this as a software engineering tool that could be used to make widespread changes,” Adam Back, now CEO at blockchain development company Blockstream, said in an interview with Bitcoin Magazine. “You could say, we are going to make a new version [of Bitcoin], and we think it will be ready in a year, but in the meantime, you can opt in early and test it.”

According to Back, sometime in the following year, on the Bitcoin IRC channel, Bitcoin Core developer Greg Maxwell suggested an idea for a “two-way peg,” where value could be transferred to the alternative chain and then back to Bitcoin at a later point.

A two-way peg addressed another growing concern at the time. Alternative coins, like Litecoin and Namecoin, were becoming increasingly popular. The fear was these “altcoins” would dilute the value of bitcoin. It made sense, Bitcoin Core developers thought, to keep bitcoin as a type of reserve currency, and relegate new features to sidechains. That way, “if you wanted to use a different feature, you wouldn’t have to buy a speculative asset,” said Back.

To turn the concept of sidechains into a reality, Back along with Maxwell and a few other Bitcoin Core developers formed Blockstream in 2014. In October that year, the group released “Enabling Blockchain Innovations with Pegged Sidechains,” a paper describing sidechains at a high level. Miller appears as a co-author on that paper as well.

https://bitcoinmagazine.com/articles/sidechains-why-these-researchers-think-they-solved-key-piece-puzzle/