When the sidechain was originally announced as a concept in 2014, the technology was widely considered to be a potentially fatal blow to the competitive currency market. After all, if you can move Bitcoin back and forth between different blockchains, why do you need a separate cryptocurrency?
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Given that the 2017 ICO bubble is still lingering in everyone's mind, it is clear that the sidechain's accompanying vision of bitcoin has not yet been realized.
While federal-type side chains like Liquid and RSK do exist, they have different trade-offs in terms of safety and resistance to review than P2P side chains. The federated sidechain model is more similar to Ripple, Stellar, and even EOS. In these models, the high degree of centralization and anonymity between validators raises the question of whether the underlying tokens of these systems should be considered true encryption. Currency (see our recent article on this topic).
At the Understanding Bitcoin conference in Malta last weekend, Adam Back, CEO of Blockstream, the company that promoted the concept of sidechains, was asked if the sidechain is still a reliable alternative to the competition. In his response, Back discusses the issues that P2P sidechains have faced so far, and their current developments, and how they will become more secure in the future.
Due to the centralization of mining, P2P side chains are difficult to achieve
After outlining the existing federal sidechain model, Back pointed out that mining centralization is a key reason why P2P side chains have not received enough attention so far.
“I think another hesitation about the P2P sidechain model is that it involves more involvement with the miners, and mining has become somewhat centralized a few years ago. However, I think the situation has improved over the past year. There are a lot of new competitors, and the influence and market share of one of the main competitors (Bitmain) has dropped significantly. So, I think this may be better. If the mining decentralization is better, the P2P side The chain will be safer."
Whether it's the SPV sidechain outlined in the original sidechain white paper, or the recent drivechain research by Paul Sztorc, the level of trust many people have in the responsible behavior of miners in these models. Not completely assured. Having said that, the RSK program is slowly moving from a federal model sidechain to a driver chain, and Sztorc is likely to release the main network-ready code for his own drivechain product sometime in the near future.
In addition to worrying about the miners' control over these types of sidechains, Back explained that these systems need to add new opcodes to Bitcoin's scripting language, which would require a soft fork. There is another reason for the existence of federal sidechains: their existence has become possible today in Bitcoin.
Perhaps something like Sztorc's drive chain proposal can be used as a useful complement to Bitcoin, because mining centralization is not as bad as it used to be.
Should developers create competitive or side chains?
In this conversation, Giacomo Zucco, head of BHB Network, asked Back to ask if he should recommend developers to use bitcoin sidechains instead of creating new ones.
"I think we can," Back replied.
Back added that the source code for the Liquid sidechain can be found online, and other companies, such as Commerce Block, are building new joint sidechain networks based on this.
"I think that someone said at a seminar yesterday that (competitive coins) seems to be unconstructive. This is how I feel about the competition. I keep trying to copy and create new coins (meaningless) because it is a dilution. Form, and because of the constant inflow of new coins, the marketing budget of the new currency continues to increase, and the old currency has been used up, so they usually have not been proven to have a long life."
Back goes on to say that he found it more interesting to build on Bitcoin because it is a bit like the TCP/IP layer of a deep, fluid electronic cash system.
“I think that as an innovative way, the side chain is likely to defeat the competition coin, but perhaps the decline of the competition currency and different smart contract systems will be their own reasons, because they compete with themselves. So, EOS and Tron – I don't even know their names these days. But many of them have big budgets, basically using marketing to increase their visibility."
Regarding the long-term security of the P2P side chain, Back responded with a recent comment by Blockstream mathematician Andrew Poelstra.
“I think the real long-term answer to a sufficiently safe sidechain model is some SNARK or bulletproof related. Today, you can do bulletproof and prove the correctness of the execution – this value has already been calculated, we know the output, and You don't need to re-run the calculations. So, you have a proof of execution. If you have enough computing resources, you can verify the entire verification of the sidechain. In fact, the original description of the two-way sidechain concept is in this context. That is the possibility of a distant future. The problem now is that they are very expensive."