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the difference is that they will no be any real pump&dump or malicious dev behind it with hidden instamine, premine and other craps like that, and their use will be directly connected with bitcoin, instead of serving their own only

The sidechain networks, from my understanding, is for thousands or millions of transactions a day, using their own coin.
Because of this, Bitcoin/bitcoin can stay the way it is and not have to hard fork to handle an increase in block sizes (20mb debate).
The idea is to keep it tied to bitcoin and will use Bitcoin network to do 1 or 2 major settlement transactions a day.

The altcoins that currently exist are not directly tied to bitcoin, but can be bought and converted into bitcoin.

But yes, I do think when it comes to the sidechain networks, they are instamined, controlled, and not decentralized.
But I may be incorrect on that.

Ultimately, the sidechain networks are a work around from increasing the Bitcoin block size.

Simple.  Sidechains ARE Bitcoin.  They are (when fully developed and proven) very close to a pure proxy for Bitcoin and don't impact the economics at all except that the balloon the demand and provide a giant incentive for pushing distribution to the far corners of the earth.

There are almost litterally no downsides.  I've identified some actual and real theoretical problems with sidechains but they were completely ignored while the utter bullshit arguments which rely on various states of ignorance are about the only things that are pumped by the bloatchain crowd.

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PS:  I personally don't dislike altcoins.  I don't own any because they are tedious and I already own BTC, but I like the opportunity for experimentation.  Sidechains offer this on top of Bitcoin itself.

Yes, in theory.
It is possible there could be competing sidechains in the future and venders could use multiple ones like Visa, Mastercard, etc.
The vendors could choose which ever sidechain network they preferred. One could be tied to Coinbase, another could be Bitpay, or etc.
Or it could be that one beats them all out and there is only one official BTC sidechain network for vendors, in the future, when the time comes.

The debate is whether Bitcoin should be "the" coin for all global transactions, or should be "the" final settlement coin, that all other systems feed back into.

There will always be scammers.  They exist in Bitcoin (and make a good living), they exist (if not dominate) in altcoins, and they'll exist in sidechains.  The better job the Blockstream guys do with sidechains, the more difficult and less lucrative sidechain scammers job will be.

Nothing about sidechains makes Bitcoin any different for general use and wealth storage than one has without them.  It's a sad fact of reality that many people can barely afford a pot to piss in and they have no real need for a heavy-duty solution such as gold and Bitcoin for wealth storage.  Leaving these people out of native Bitcoin is mildly sad, but it really is no great loss for them.  Indeed, allowing them a reliable and inexpensive solution with robust protection via Bitcoin backing is doing them a great service.

I don't get side chains.  Can somebody post a example of how one might work?  Would the coin used be bitcoin or something different?

Because you still keep using bitcoin and its snet effect it is spread around the people in the world

you don't need to accept a bunch of altcoins,just accept bitcoin

the dev behind it are the four dev that work on bitcoin, one should trust them more than a random dev on the altcoin section

also bears in mind that sidechain are empty, you just fill them by moving your bitcoin, they are alternatives blockchain that are waiting to be used, for their unique features

here a good explanation http://gendal.me/2014/10/26/a-simple-explanation-of-bitcoin-sidechains/

basically a interaction between multiple blockchain, like multiverse, if you allow me an analogy


a summary

The sidechains ideas is this:

Send your Bitcoins to a specially formed Bitcoin address. The address is specially designed so that the coins will now be out of your control… and out of the control of anybody else either. They’re completely immobilized and can only be unlocked if somebody can prove they’re no longer being used elsewhere (I’ll explain what I mean by this in a minute).   In other words, you’ve used the core bitcoin transaction rules I described above to lay down a specific condition that the future owner – whoever it ends up being – needs to fulfil in order to take control

Once this immobilisation transaction is sufficiently confirmed, you send a message to the other blockchain – the one you were wanting to use. This message contains a proof that the coins were sent to that special address on the Bitcoin network, that they are therefore now immobilized and, crucially, that you were the one who did it

If the second blockchain has agreed to be a Bitcoin sidechain, it now does something really special… it creates the exact same number of tokens on its own network and gives you control of them.

So it’s as if your Bitcoins have been transferred to this second chain. And remember: they’re immobilized on the Bitcoin network… so we haven’t created or destroyed any…. Just “moved” them.

You can now transact with those coins on that second chain, under whatever rules that chain chooses to implement.

Perhaps blocks are created faster on that sidechain. Perhaps transaction scripts are “turing complete”. Perhaps you have to pay fees to incent those securing that sidechain. Who knows. The rules can be whatever those running that sidechain want them to be. The only rule that matters is that the sidechain agrees to follow the convention that if you can prove you put some Bitcoins out of reach on the Bitcoin network, the same number will pop into existence on the sidechain.

And now for the second clever part. The logic above is symmetric. So, at any point, whoever is holding these coins on the sidechain can send them back to the Bitcoin network by creating a special transaction on the sidechain that immobilises the bitcoins on the sidechain. They’ll disappear from the sidechain and become available again on the Bitcoin network, under the control of whoever last owned them on the sidechain.

A sidechain is (or can be) just about any alt, but it has a 'two-way-peg' to BTC.  One can autonomously translate your 'alt coin' back into BTC or it could happen automatically if the alt coin fails.  In order to take a position in a sidechain one must reduce their position in BTC (or someone must.)  This makes the fear of 'inflation' bogus.

These things will not necessarily always (or ever) be true, but you are perfectly free to choose which sidechains you wish to use based on the feature set, quality, etc which is important to you.  Free market FTW!

These are my personal understandings of Sidechains, or at least the promise of them, but I did not develop them and am not intimately familiar with the technical details.  I will be familiar before I take any of the many positions I anticipate however.

The thing people are missing is that most users will stick to transacting in BTC, period. It's a very nice idea, i am actual porting and running a testnet by tonight but don't you see, instead of making BTC easier to use and explain, it just got a thousand times harder. This in no way improves the 1 MB situation or the mass adoption goal.

I think that this release was hurriedly pushed forward to try and counter the advocates of the 20/8 MB increase, even some of the stuff i am looking at now make no real sense. I'll keep trying to grasp it, maybe i'll change my mind, but i'm so far unimpressed (with regard to fixing tx issue).

Would it be necessary to make changes to the bitcoin code to implement sidechains?

I cannot envision the community easily accepting code changes after all the arguments over increasing the block size.

If anyone wants to read an example of sidechains, here is a link from reddit I just read.
It seems like a good example for anyone who is completely lost.
http://www.reddit.com/r/Bitcoin/comments/396m1y/a_simple_way_to_think_about_how_sidechains_work/ (http://www.reddit.com/r/Bitcoin/comments/396m1y/a_simple_way_to_think_about_how_sidechains_work/)

So who mines the sidechain and what will the incentive be? 

Pretty much this. Altcoins are just a hindrance, people are creating them as pump and dump in order to earn quick money almost in 100% cases.
Most of them are copy paste or existing code without any changes beside name of the coin. Instead on focusing our attention on altcoins why don't we focus and upgrade bitcoin?
It would beneficial for us a lot more than creating new altcoin everyday. I think going pro sidechains are also not the way to evolve... Only pure bitcoin is the way. Stop deviations.

from what i understand those sidechain are useless if you don't move your bitcoin there, this is the real difference, they only work when someone use them with real bitcoin from the main blockchain

if they aren't working in this way, then they should re-think about it and make them working in this is way

 - Gold relies on physics for backing.

 - Fiat relies on a judicial system for backing.  (legal tender laws and enforcement.)

 - Bitcoin relies on math for backing.

 - Sidechains rely on Bitcoin for backing.

Sharp-eyed viewers will note that sidechains which are properly implemented actually do not need POW or POS (proof-of-work, proof-of-stake) to have an autonomous backing store because they rely on something else, though force of habit will probably make most of them make some use of certain of these mechanisms.  What sidechains need desperately, however, is for that their backing is rock solid.  I hypothesize/hope that it provides sufficient incentive to keep Bitcoin healthy, but this relies on sidechains themselves to be widely geo-politially distributed which is entirely possible and even likely.  And if not likely, at least the best hope.

Here is a very real danger to Bitcoin which nobody talks about:  Sidechains could relatively easily 'swap out' their backing store to something else.  If they did so en-mass Bitcoin could suffer or even die.  Should that happen, however, it would probably be in a situation where that was a good thing, and the value base may well be snapped from the extinct blockchain.

Oh yes, lets all centralize around bitcoin.  ::)

i think the value should be 1:1 with bitcoin, and if one of the sidechain value, is increased the ratio should still remain the same, so bitcoin should increase too in value(it is as if they had bought bitcoin when they buy each saidechain counterpart), this should avoid any issue about your concern

Bitcoin values themselves would probably stabilize under a healthy sidechains ecosystem simply because the various sidechains would gain and lose traction at the expense of one another.  That is an entirely different thing than Bitcoin centralizing.  Indeed, since sidechains have a likelihood of distributing into a variety of niches and dragging Bitcoin alone for it's support role, Bitcoin is likely to de-centralize significantly as a result.  My projection of course.

To be fair, kingcolex, you're the first one that I see that understand why having sidechains is not the Holy Grail at all.

Sidechains are altcoins, which use Bitcoins as their basis. By subscribing to the sidechain, you subscribe to the same ethos as Bitcoin... namely, the vast number of coins owned by Satoshi and now the core developers (some of whom were rumoured or seen to have made large purchases of Bitcoins with the formation of Blockstream).

I can't wait for the multitude of sidechain forks that all compete with each other. Sidechains themselves require incentives to operate securely, such as fees and the continued security of the Bitcoin network, so I'd guess we'll start to see a lot of the same issues in sidechain space as we do in altchain space. I really don't think there's any difference between the two. You can also issue your own assets already on Bitcoin (e.g. coinprism, counterparty), so the notion of token issuance for use in general scamming will surely appear on sidechains as well. You can't out-technology human speculation in finance.

The other issue with sidechains is that effectively everything can become a sidechain of anything else if you push foreign coins onto Bitcoin mainnet as coloured tokens. I've been calling this "bilateral two-way peg" for a while, and I'm not sure that there's any way Bitcoin mainnet could prohibit it after they add sidechain-related OP codes. The real (negative or positive) value of sidechains remains to be seen, and I think we haven't even touched the scale of redundancy that might occur in the future as a result of them.

The good thing is that the Blockstream guys are doing some pretty neat cryptographic research, in any case.

Perhaps in the Soviet Union of Bitcoin. Economic outcomes are terrible when there are no competitors for any given market, for example, if there were a government monopoly allowing only a single car manufacturer. You might imagine that this single company would have the highest efficiency, but the reality is that efficiency actually decreases without competition. I doubt Blockstream and sidechains would ever have come into being without the pressure (and sometimes, innovation) afforded by altchains.

Oi, in this case it's everything else is centralizing around bitcoin. So a failure in bitcoin is a failure in everything.

Actually, it's just the opposite.  A value store could be 'swapped out' and almost certainly would in the case of a catastrphic failure.  An examples of such would be the subjugation such that blacklisting was sufficiently effective to materially impact fungibility of Bitcoin itself.

In most cases of the above mentioned failure mode, a successful replacement backing store would likely take a recent snapshot of the Bitcoin blockchain as a source-of-truth to assign valuations.  This promotes confidence in Bitcoin itself.

One rarely mentioned advantage of adding one layer of abstraction to a global currency solution (that is, adding sidechains to Bitcoin) is that Bitcoin itself as a backing store has a lot more flexibility to react to attacks while the various sidechains continue to basically do their job with a much more muted impact.  This might be the reason why peg operations are projected to be considered robust when they are like 144 blocks deep.  I don't have anything to do with the Blockstream folks so this is just a conjecture on my part.

How secure would a sidechain be?  Just as secure as the bitcoin network?  Or easily hacked?  Double spend?

Depends on what type of sidechain is made.
You could create one that mines, like bitcoin network, and checks for double spends and etc.

But overall, most would probably be premined/instamined.

In the case of the Elements Alpha sidechain:

"[...] Elements alpha is based completely around a 5-of-7 multisig address. The seven keys are distributed on seven servers all running the Elements network. They are the only nodes that are ever allowed to "mine blocks," and through that 5-of-7 multisig, they control the actual Bitcoin value. [...]"

I re-recommend this reddit post: https://www.reddit.com/r/Bitcoin/comments/396m1y/a_simple_way_to_think_about_how_sidechains_work/

Why would they have to be centralised? Taking the below explanation (@Amph - thanks for sharing), you wouldn't have to rely on anyone to guarantee say 1:1 exchange rate, since BTC backing the sidechains tokens are already there secured and temporarily immobilised (not destroyed). At least that's how I understand it. So the only concern is whether the sidechain isn't faulty/flawed and whether it has healthy network.


Although, assuming the sidechain offers 1:1 token, when making transition back to the BTC blockchain, I think the exchange rate would actually be 1 token: 1BTC net of tx fee (but that's not a big deal).

What kind of transaction per second volume will BTC have when sidechains are running? Will it be able to compete vs the big boys (mastercard/visa)?

99% altcoins are cheaters , they fake the total amount and do pre mining , so ppl have their right choice

This is why I think pushing side chains, which are unproven in practice, is not the best solution right now.  It is the hard way, the easy way is increasing the block size limit.  Sidechains might be great in the future but they need lots of work to deal with the problems mentioned above.

On the face of it, it seems sidechains are an excellent way to get sorely needed technical innovations going.

Also, analogous to (but not entirely identical to) the dolloar benefiting from other currencies being pegged to it, Bitcoin should enjoy a free ride on increased demand if any of the sidechains succeed, but be protected if they fail.  (A sidecoin may flourish where Bitcoin doesn't, e.g. by being fast and lightweight for small and frequent transactions.  So let a hundred flowers bloom.)

The only possible problem I can see is this: we've all seen code that reads fine to developers, compiles fine, tests fine and works fine in production.  But there is a subtle design bug that causes entirely unexpected things to happen when a special set of inputs occur.  What is to prevent a dishonest developer or institution from writing a sidechain with such a "bug" planted?  It seems the sidechain should be verifiable by software as honest, and that the design of the sidechain should have this testability built in.

Having testability built in sounds like solving the Halting Problem to me.

I see dealing with this problem as being where Blockstream would likely have a promising business model.  I could see them putting a 'stamp of approval' on their client's sidecoin and it being worth a lot to do so.  If they were commissioned to implement the sidechain in the first place they would be extra well positioned to do so efficiently.  Of course if they screw up then their reputation and thus their ability to command a good fee for their services would suffer.

This is not a full solution to the problem, and the problem is a very legitimate concern.  As with so many things it is ultimately up to the individual to protect themselves.  As I've said before, I won't likely be putting any significant value into any particular sidechain for some time and maybe not ever.

One conclusion I come to after reading this thread is that the concept of sidechains really needs to be explored in a (major) test environment or with some minor altcoin sprouting sidechains, before doing it with bitcoin. It's not a simple concept at all, and I'd hate to watch our investments in BTC vanish because of a remarkable scam or an ugly bug or runaway inflationary effect or something else that didn't quite get caught in time.

Perhaps one way to clarify things is to ask: What CAN'T be done with side chains? Once we grasp those points, it becomes easier to identify what good or bad things can be done, and how sidechains could be manipulated.

I guess another possible solution is to let things be.  (This has its rough counterpart in the fiat world: many countries which peg their currencies to the dollar from time to time are the worst printers.  Britain that pegged sterling to gold for centuries turned out the same way, in slow motion.)  Let the market decide how much people want to leave in sidechains at any one time.  Bitcoin should do well in any case, and especially if there is a massive movement into one of the successful sidechains, maybe for its technical features, which turns out to be a major scam.

There is no speculation incentive because all investments are denominated in BTC. Thus this will force consolidation. Unless there are revenue models and/or dividends for side chains.

Both of these comments are incorrect enough to make one suspicious that they are fairly blatant FUD of the synthetic kind, but I don't know that.

In the first case, there are technically possible ways for transactions to auto-revert.  Thus, if one put a stake into a sidechain which simply vanished off the face of the earth it still might be possible to have one's Bitcoin come home.  As always, if Bitcoin itself cannot be defended and is destroyed it won't matter very much.  Interestingly, the sidechain guys (which has a very strong overlap with 'the Bitcoin guys') seem to have impressed a lot of people, myself included, with their progress on some of these fronts at this early phase of their existence.

To the second point, I would never use anything for anything important which I cannot compile myself.  Everything is open-source and anyone can look at it.  Blockstream currently consists of people who have a demonstrated disposition to 'getting off' on doing high quality security conscious software (as evidenced by a very significant fraction by lines-of-code in Bitcoin core itself not to mention some of the most critical of the support systems.)

I lack the skill and time to evaluate complex cryptographic code and perform system analysis and testing myself.  I would value a solution which has been looked over by these people at this time.  Long before Blockstream became some sort of and 'agency like group' I would have moved on to trusting others to provide this service for me.

Ah... just like all alt coins are merge mined with Bitcoin to support the entire network hash rate? After Elements adds explicit tokenization it'll be easy for anyone to make a sidechain fork and issue "Sidechain Funbux" on their fork, pre-sale them, etc. Bilateral two-way peg also means that Bitcoin might inadvertently end up supporting a number of pre-existing alt. coins anyway; especially since we can now explicitly tokenize them in a 1:1 peg on the elements sidechain and transfer them there.

You can change the tech, but you can't change the underlying issue.

Sidechains are best used not as alts, but as other hash-chain secured information services:

• Decentralised TLD/DNS resolution (Namecoin without the coin)
• Ownership title (land, vehicles, businesses)
• Cryptographic contracts
• Identity/reputation system/s
• Votes

The key thing is that the whole bitcoin hashing power could potentially choose to mine a successful sidechain, and that's alot of hashing assurance you're getting. Sure, there are going to be side-coin chains too, but many of those ideas may just end up getting merged into the main chain if they're suitable for that. Most will die pretty quickly, I would expect.

It's not a straight choice like that IMO. Bigger blocks do one thing. Side chains do another. Both have pros and cons. Both will end up happening, in one form or another.

The fundamentals of the Bitcoin core doesn't need to change for sidechains to have any sort of configurations. I think sidechains have a place. A country that wants to use Bitcoin technology but under their own rules, could create their own coin through a sidechain, and still operate within the safe Bitcoin ecosystem instead of being some weak alt exposed to attacks.

Yes, but we need things happening for the right reasons. Trying to solve scalability with sidechains is not right, as far as I understand.

Just FWIW, I have a decent hands-on insight into how corporations tend to get software.  They very rarely write core systems in-house, and usually contract out even fairly basic adaptations.  For tricky cryptographic code it will almost always be the case that it is commissioned from experts.

If Blockstream develops various sidechains for various customers there is some chance that they will demand to have it be open-source.  There is also a fair chance that in many cases the client themselves will wish to have it open-source as a method of instilling confidence.

If a sidechain is closed-source I still might use it for non-trivial needs if it were released by some entity I trust, but this would be a strike against it in my book (though I'm a bit of an odd-ball in these things so it may not matter much to most people.)

I would even use closed source from an entity I didn't trust when only trivial values which I can afford to walk away from (and laugh) are involved.  Indeed, I entrust significant sums to Coinbase at times (out of necessity) and I have no idea what their back-office looks like.  From my experience in the commercial software industry I figure it's probably a mess held together with shoe-strings and bubblegum.  Most closed-source commercial software fits that description.

But what you've described above is not different than what we already have. I thought you were implying pegged side chains would increase speculation and especially in a way that might dilute Bitcoin more than presently.


I am unclear on how pegged side chains prevent a BTC pegged side chain from creating more BTC fungible monetary units than were transferred into the side chain from another BTC chain?

Assuming debasement of BTC can be cryptographically prevented (but I can't fathom how that can be possible in a decentralized context  ??? ... however I haven't yet entirely digested the Blockstream whitepaper), then I don't see how you justify your claim that Bitcoin might end up supporting altcoins?

(actually I see another way, and it appears to be a win-win paradigm for all involved)