Pegged Sidechains [PDF Whitepaper]

[JorgeStolfi]

This thread seems to be dead.  Is there a live discussion of sidechains anywhere?  On reddit or other forum perhaps?

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[smoothie]

There are so many presumptions about what a pegged side chain to BTC would look like.

That is to presume the security of the SC would be equal or greater than the current BTC master chain. I highly doubt that will ever be the case.

If there was ever equal or greater security on a SC then why not have everyone just switch to the more secure chain?

To peg them and say they are "equal" and coins are transferrable between them makes little sense as one chain will always be more secure or have more infrastructure to support it.

Seems like a broken idea to me.

[BlindMayorBitcorn]

There are so many presumptions about what a pegged side chain to BTC would look like.

That is to presume the security of the SC would be equal or greater than the current BTC master chain. I highly doubt that will ever be the case.

If there was ever equal or greater security on a SC then why not have everyone just switch to the more secure chain?

To peg them and say they are "equal" and coins are transferrable between them makes little sense as one chain will always be more secure or have more infrastructure to support it.

Seems like a broken idea to me.

Is it set in stone yet? Or just a proposal?

[JorgeStolfi]

You know that the proper thread to discuss sidechains is this one, right? 
I think sidechains became the topic around that point, plus or minus a few pages.

[Adrian-x]

You know that the proper thread to discuss sidechains is this one, right? 
I think sidechains became the topic around that point, plus or minus a few pages.

The discussion around the potential economic impact of SideChain started hundreds of pages back
https://bitcointalk.org/index.php?topic=68655.14260 some good insight hidden in the many pages of name calling and trolling 

[Talor]

There are so many presumptions about what a pegged side chain to BTC would look like.

That is to presume the security of the SC would be equal or greater than the current BTC master chain. I highly doubt that will ever be the case.

If there was ever equal or greater security on a SC then why not have everyone just switch to the more secure chain?

To peg them and say they are "equal" and coins are transferrable between them makes little sense as one chain will always be more secure or have more infrastructure to support it.

Seems like a broken idea to me.

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[cbeast]

There are so many presumptions about what a pegged side chain to BTC would look like.

That is to presume the security of the SC would be equal or greater than the current BTC master chain. I highly doubt that will ever be the case.

If there was ever equal or greater security on a SC then why not have everyone just switch to the more secure chain?

To peg them and say they are "equal" and coins are transferrable between them makes little sense as one chain will always be more secure or have more infrastructure to support it.

Seems like a broken idea to me.

It is a broken idea, but switching to another chain is either done via proof of burn, two way peg, or a hard fork. Either way it's a serious change. The SC idea isn't that bad an idea, but in the end, they would probably lead to more security issue due to added complexity. If it can be done, it will be done, but honey-badger don't care, and I'm tired of the whining from SC folks. Just do it.

Amir Taaki wants to bring complete anonymity to Bitcoin. First he has to demonstrate it on other blockchains. The SC developers can demonstrate it on an altcoin and if it works, then Bitcoin can adopt it. If they come up with a two-way peg that works, then the trade-off for whatever benefit the SC offers may be worth some sacrifice, like security or functionality. It's unlikely it can be more secure than Bitcoin AND have other benefits. If they did, then just hard fork Bitcoin.

[adam3us]

Amir Taaki wants to bring complete anonymity to Bitcoin. First he has to demonstrate it on other blockchains. The SC developers can demonstrate it on an altcoin and if it works, then Bitcoin can adopt it. If they come up with a two-way peg that works, then the trade-off for whatever benefit the SC offers may be worth some sacrifice, like security or functionality. It's unlikely it can be more secure than Bitcoin AND have other benefits. If they did, then just hard fork Bitcoin.

One way in which a side-chain would not be identical to bitcoin is it has different features.  Unless we have provable security the added complexity would tend to make a side-chain less secure.  (And thats a reason for side-chains .. so that people can get access to more features without exposing other people to the risks relating to their feature).

For now there are also security tradeoffs in the 2wp mechanism, so that is another source of difference.

But in the future, if for example snarks or some other innovation becomes a proven secure cryptographic construct, then we can have security-equal sidechains (and security-equal smart-phones).  And then it may be possible to have a more secure side-chain: make a simplified side-chain that doesnt include bitcoin-script, p2sh, etc ie strips a bunch of stuff for pure cold storage.  Of course you also have the incentive compatibility issue, however over time the difference erodes as volume & hence fees increase and reward decreases as we get through more halvings.

Adam

[cbeast]

Once the genie is out of the bottle and someone creates a new technology, expect the bad actors to be first in line.

[adam3us]

Once the genie is out of the bottle and someone creates a new technology, expect the bad actors to be first in line.

Indeed the scammers are out in force in bitcoin land, as I said on the other chain:

its caveat emptor, you shouldnt put money into a chain unless there is some assurance that security & bitcoin protocol knowledgeable people have audited it.  People could certify chains (like sign them - "my name is blah and I'm a security researcher with reputation and I and my buddies audited this code and its good") or wallets could etc.  Its good and a feature that people can opt to use uncertified chains.  You want a situation where there is real open possibility for technical innovation & competition in chain features.

You also want no central control so no chains can get black listed.

Adam

[Domrada]

Forgive me for resurrecting an old thread, but better late than never, right? The ideas in this paper are good, 95% of the way there, I'd say.

Section 3 describes the SPV proof method, essentially requiring us to trust miners not to collude to steal the funds mid-withdrawal, which they could very easily do. This solution, I think, flies a little too close to the sun; requiring this much trust in miners would, for me, break Bitcoin.

Appendix A describes a federated peg method. This requires us to trust federated servers. This would be fine for a laboratory experiment, but this solution is not trustless enough for actual use. No sale!

But it occurs to me, that there's a workable example of something that's not federated, but that resembles a federation enough to make collective decisions. You might even say it's already proven somewhat successful. I'm referring to the super node/master node concept, generically, collateralized nodes. The super nodes decide things in similar way to members of a federation, but membership is fluid. Anyone with enough collateral will be accepted into the federation as a matter of protocol. I'm more comfortable with this model; it makes the system open. Anyone materially invested in the chain can run a node and get a vote. Does the system have vulnerabilities? Having participated in working examples (Dash and others) myself gives me confidence that this system can be stable and robust against potential attack vectors. Bitcoin itself had to stand the test of time before people became confident that it was safe.

The next question: could collateralized "super nodes" on a side chain function to approve those critical Withdrawal Transactions? I think they could, and in a straightforward manner, too. Main chain coins could be held in safekeeping collectively in a multisig address, just as they are in the federated approach. (m of n) keys would be required to move coins out of that address. Each super node holds a key. As super nodes go offline and come online, the remaining nodes sign transactions to move all funds into new (m1 of n1) addresses and share them among all super nodes. It is not necessary to submit these to the blockchain immediately, as long as any single super node remains, the funds cannot be lost. It should be more than sufficient to submit the latest one every 10 minutes or once per Bitcoin block, or at least once per Withdrawal Transaction. The ratio of m to n should be as high as necessary to prevent a single actor or coalition from controlling m supernodes, but be low enough to be reasonably certain that (n-m) / n of the nodes will not go offline simultaneously. We can look at empirical data from Dash to debate and determine an ideal ratio.

In combination with SPV proofs, I would be confident enough in such a sidechain to actually put my bitcoin there.