The side chains Bitcoin sidechains are defined differently depending on who you ask. The definition of what constitutes a side chain has a long history.
In the most general sense, a Bitcoin sidechain can be described as a block chain that can interact with another blockchain. There are two basic types of Bitcoin sidechains: those with two independent blockchains and those where one blockchain is dependent on the other.
In the case of the first, both Bitcoin Blockchains can be considered as the side chain of each other, which means that They are equal and sometimes both blockchains will have their own (separate) native token. As for the latter, one Bitcoin sidechain can be considered as the main chain and the other as the dependent or “child” chain.
Usually in a side chain relationship Father son, the child chain does not create its own assets. Instead, it gets the assets from transfers from the main chain.
A necessary pin for “sidechains”
Bitcoin sidechains can interact in many different ways. However, it almost always includes the ability to trade assets between the chains. This is accomplished through the use of a two-way jack.
The easiest bidirectional binding to understand is a centralized exchangewhich works like this: You have Bitcoin, but you want Ethereum, so you exchange the former for the latter through the pair between them.
Bitcoin is a very volatile asset.
Unfortunately, using a centralized exchange requires trusting a central party, which requires intermediary fees and carries the risk of third parties. There is a better way. A decentralized two-way peg basically consists of “lockboxes” on both blockchains.
An example of a “sidechain”
Let’s look at a simplified example to illustrate how these are used. security boxes to facilitate the transfer of assets from one chain to another. Imagine that you want to transfer a BTC from the Bitcoin network to a sidechain. First, send a transaction for one BTC to a designated lockbox address on the Bitcoin network.
Any Bitcoin that is in the vault is effectively removed from the total Bitcoin supply for the moment. Information about the address of the sidechain you want to send the BTC to is also included in that transaction.
Once the transaction is received by the Bitcoin network and added to the blockchain, the sidechain lockbox releases one BTC and sends it to the address indicated on the blockchain. transaction of the Bitcoin network. To return the BTC, I simply reversed these steps.
In cryptography, the system for moving assets from one string to another and back via a two-way peg is often called a bridging. Bridges are not limited to the transfer of assets; assets can also be traded.
Side Chain Benefits
Sidechains provide three main benefits: scalability, experimentation/upgrading, and diversification.
Bitcoin is the most famous cryptocurrency in the world.
scalability
A sidechain can offer faster and cheaper transactions through many optimizationsfor example, by moving a certain type of transaction to another chain whose protocol is designed specifically for that type of transaction.
This should clear up the first string, making the first string faster and cheaper as well. Sidechains can also use much faster and newer techniques which are more efficient.
Experimentation and upgradeability
It can be difficult to update an entrenched blockchain with diverse stakeholders. Reaching a consensus can be slow, if not impossible. Sidechains allow testing and deployment new ideas without a broad consensus. This experimentation and upgradeability enables many of the efficiencies that contribute to scalability.
Diversification
Assets from other blockchains can be made accessible to more people. The applications like loans and loans in DeFi they can gain access to assets of other chains.
Disadvantages of side chains
Sidechains are responsible for their own safety; the security of a sidechain is not derived from the blockchain with which it is connected. This is both positive and negative.
It means that poor security on a blockchain does not affect the security of the connected blockchain. However, this means that popular blockchains like Bitcoin they cannot provide any security force to the smaller and less popular blockchains.
Although it is represented as a physical currency, Bitcoin is a 100% digital asset.
Side chains require their own miners. A large pool of diverse miners is an important way that most blockchains secure their network.
Newer chains need to do everything they can to grow their mining ecosystem, but this can be difficult because newer chains are often less profitable for the miners.
Sidechains can make this worse, because in parent-child sidechains, the sidechain normally does not have its own native currency. This acts as a disincentive for miners because their main source of income is the issuance of native coins.
Finally, some people may make assumptions about their assets on one blockchain that are not true when transferred to another. For example, if you hold BTC because of Bitcoin’s security and trust model, it’s pretty much guaranteed that if you transfer BTC to a sidechain, security will be less robust and the trust model will be different.
Three Examples of Side Chains
transmission chain
Known in English as “drivechain“, is an example of the second type of “sidechain” mentioned above: “parent-child”. Bitcoin is the parent and Drivechain is the child, so Drivechain does not issue a native token. Instead, it relies solely on transferred BTC from the Bitcoin network.
Drivechain uses SPV to implement its bidirectional binding, which relies on miners to validate transfers. A unique feature of Drivechain is the creation of blind fused mining (BMM), which addresses the issue of sidechains requiring your own miners.
Polygon is a mix of side chain types.
BMM allows a miner on the Bitcoin (parent) blockchain to mine on the Drivechain (child) without running a full node of Drivechain, and the miner is paid in BTC.
SmartBCH
SmartBCH is an example of the first type of sidechain: two independent blockchains. SmartBCH is an Ethereum Virtual Machine (EVM) yWeb3 of a compatible sidechain for Bitcoin cash, but does not have its own native token.
SmartBCH uses a unique bridge called the SHA-Gate. The transfer from BCH to SmartBCH is handled by full node BCH clients. The transfer from SmartBCH to BCH uses a federation for the operation and miners for supervision.
Polygon
Is a mix of both types of side chains. It uses an Ethereum framework that allows for the creation of secondary chains that can process transactions before periodically finalizing them on the Ethereum blockchain. Polygon supports EVM and issues its own native token, MATIC, via proof-of-stake validators. It has two way plugs.
Polygon aims to provide connections between blockchains. Since it supports EVM, connecting to other blockchains that also support EVM, like SmartBCH, should be less challenging than blockchains that don’t, like Bitcoin.
