The consensus mechanism is centralized in the hands of a single entity which mission is to verify and add all transactions to the blockchain. A network based on a private blockchain, therefore does not need to use a mechanism such as “Proof of Work” or “Proof of Stake” which are complicated to implement and expensive. The problems of security being much more simple in the case of private blockchains, it is possible to apply the mechanisms of consensus lighter, more effective and therefore easy to deploy such that the BFT.
A company called Blockstream has been focusing on these developments and has announced the release of Sidechain Elements, which is an open-sourced framework for sidechain development. It includes a functioning code and a testing environment for working with sidechains with several components: the core network software to build an initial testing sidechain, eight new features not currently supported by bitcoin, a basic wallet and the code for moving coins between blockchains.
2. I have not had a chance to read the original article on side chains, but I am sure they deal with my next problem quite adequately. However it is not addressed in the above article. The primary problem that must be addressed with the notion of side chains, as I see it, would be the issue of the mining required to authenticate transactions and enter them into the block chain. The article mentions that side chain system more or less leaves the issue of verification within the side chain transactions as something of a black box, somewhat implying that they don’t have to be considered. But for any user, they would need to be both considered and understood. Such a process would presumably require mining verification of some kind, (our mental model must include consideration of the somewhat unusual verification method for bitcoin transactions themselves, – as everyone would agree, the verification process is not just a “checklist” of valid transaction strings. The validation process requires mining in much the same sense as mining new coin. None of this is mentioned or discussed in the article. ) As a result, the verification of side chain transactions outside the block chain introduces whole new layers of risk into the Bitcoin model, and new layers of unknowns.
A public blockchain is a platform where anyone on the platform would be able to read or write to the platform, provided they are able to show the proof of work for the same. There has been a lot of activity in this space as the number of potential users that any technology in this space could generate is high. Also, a public blockchain is considered to be a fully decentralized blockchain. Some of the examples are:
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A federation is a group that serves as an intermediate point between a main chain and one of its sidechains. This group determines when the coins a user has used are locked up and released. The creators of the sidechain can choose the members of the federation. A problem with the federation structure is that it adds another layer between the main chain and the sidechain.
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Let's explore if there is a hybrid blockchain concept (third type). A consortium blockchain would be a mix of both the public and private. Wherein the ability to read & write could be extended to a certain number of people/nodes. This could be used by groups of organization/firms, who get together, work on developing different models by collaborating with each other. Hence, they could gain a blockchain with restricted access, work on their solutions and maintain the intellectual property rights within the consortium.
@tradles – thanks for taking the time to explain this. OK – so I get the debate around blockchain bloat and the (grudging) inclusion of OP_RETURN, etc., but what I’m missing is that I can only really see one scenario where embedding any identity data into the blockchain makes sense…. and that’s when I want to *associate* an identity with a transaction I’m performing.
If you want a deeper look at Proof of Stake check out our detailed POS post. In short, while Proof of Work is an effective mechanism to secure the blockchain and provides a trustless consensus paradigm, it’s extremely energy intensive because of all the computing power required to solve hash problems. Also, while it was meant to be decentralized, it’s actually becoming more centralized as miners consolidate and massive mining setups eat up larger shares of winning blocks.
There has been tremendous interest in blockchain, the technology on which Bitcoin functions. Nakamoto developed the blockchain as an acceptable solution to the game theory puzzle – Byzantine General’s Problem. This lead to a number of firms adopting the technology in different ways to solve real world issues, wherever there was an element of trust involved. Majority of them could be relating to the ability to provide proof of ownership – for documents, software modules/licenses, voting etc.
Send your Bitcoins to a specially formed Bitcoin address. The address is specially designed so that the coins will now be out of your control… and out of the control of anybody else either. They’re completely immobilized and can only be unlocked if somebody can prove they’re no longer being used elsewhere (I’ll explain what I mean by this in a minute). In other words, you’ve used the core bitcoin transaction rules I described above to lay down a specific condition that the future owner – whoever it ends up being – needs to fulfil in order to take control
This approach isn’t fool-proof, but it’s not by mistake that the system looks the way it does today (that’s my history degree talking). Despite best technical efforts, human problems remain within the realm of probability. From http://www.nytimes.com/2009/01/15/books/15masl.html: “…blame cannot be easily assigned: not even the most sophisticated economists of the era could accurately predict disaster, let alone guard against it. The effects of a public herd mentality at the time of the [insert catastrophe here] are depicted, all too recognizably, as unstoppable.”
If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur. For example, Ethereum has hard-forked to "make whole" the investors in The DAO, which had been hacked by exploiting a vulnerability in its code. In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment.
Hasta la fecha (Agosto del 2016), las sidechains sobre Bitcoin no son más que algo teórico. Una implementación de este tipo requeriría de un cambio en el código Bitcoin (hay miembros de la comunidad Bitcoin con gran prestigio, como es el caso de Peter Todd, que argumentan que una sidechain, tal y como la describe Blockstream en su paper, no podrían llevarse a la práctica en Bitcoin sin hacer un gran cambio, hard fork, en Bitcoin). En el mismo paper de blockstream se reconoce que una implementación de este tipo, la cual su teoría es simple pero su implementación compleja, se enfrenta a problemas que no está del todo claro que puedan solventarse (y no todos son de tipo técnico).