Deleted

[R2D221]

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

[tacotime]

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.

[tacotime]

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

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.

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.

[bitcreditscc]

Oh yes, lets all centralize around bitcoin. 

That's the thing, it seems that all of these sidechains would pretty much have to be centralized to keep the price stable when you convert back to bitcoin but that's not what many want from bitcoin.

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.

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

[tvbcof]

Oh yes, lets all centralize around bitcoin. 

That's the thing, it seems that all of these sidechains would pretty much have to be centralized to keep the price stable when you convert back to bitcoin but that's not what many want from bitcoin.

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.

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.

[Alley]

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

[AgentofCoin]

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.

[coinpr0n]

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

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/

[pawel7777]

Oh yes, lets all centralize around bitcoin.  

That's the thing, it seems that all of these sidechains would pretty much have to be centralized to keep the price stable when you convert back to bitcoin but that's not what many want from bitcoin.

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.

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

The sidechains ideas is this:

...
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.

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).

[neurotypical]

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).

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)?

[GRWer]

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

[anderson00673]

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.

[BobK71]

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.

[R2D221]

the design of the sidechain should have this testability built in.

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

[tvbcof]

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.

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.

[ebliever]

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.

[BobK71]

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.

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.

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.

[TPTB_need_war]

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.

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.

[tvbcof]

Sounds like these sidechains put a third party in control of your Bitcoins. It's interesting because it can be used to issue stocks and bonds paid with Bitcoin, but I think there will be losses most of the time, if not total loss of value due to the person in charge stealing or getting hacked.

That's why tvbcof was suggesting a seal of approval by the bitstream team, but this would require them eventually turning into an agency like group that goes through the code and evaluates it and to have a successful sidechain you would have to go through a third party and I am sure pay them and make any changes they mandate. Seems like way too many third parties involved for Bitcoin when it was supposed to be trustless.

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.

[tacotime]

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.

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.

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.