Bitcoin sidechains available today?

[Abiky]

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.

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.

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.

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.

[figmentofmyass]

every second layer solution comes with trade-offs, including sidechains. eg 3rd party trust (federated chains) or lower security (merge-mining).

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.

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:

Liquid is secure under legal-based assumptions.

Indeed, Liquid is more secure against many types of 51% attackers than Bitcoin; putting coins in Liquid could be a useful hedge against certain Bitcoin failure modes, as it let's you continue to trade BTC while Bitcoin is down.

this guy puts it aptly:

Liquid provides more... liquidity at cost of less decentralization. This is a legitimate trade off for some situations, or even most.

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.

[Abiky]

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:

...

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.

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

[Ucy]

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

[figmentofmyass]

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.

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.

[Abiky]

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.

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