I'm trying to articulate the purpose of sidechains, and want to do so in a real-world example. I'd appreciate feedback and criticism on this example:
Someone could create a sidechain for registering vehicles in the USA that has hooks into the DMV. To buy someone's car, you could create a transfer from your Bitcoin wallet to the sidechain. Now your money lives on the sidechain, and when the DMV approves the transfer the money goes to the seller and the car title (stored on the blockchain) goes to you.Some reasons that this would be done on a sidechain:
- if the DMV's hooks introduce risk [3] , the entire Bitcoin blockchain is not compromised
- specific functionality for vehicle transfers, that are not appropriate for the Bitcoin blockchain can be baked in
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