People believe that permissioned means that only a select group of people can access the data and that’s the security feature. But it’s not. Since there is no real user data on the blockchain, (you) as a member of the public, can’t verify the actual content of it. This means that data resides in a location where corruption can stay undetected and data can be easily modified. So why does it even exist? Mainly because of the phenomena known as “hype surfing”; essentially reusing old technology and strapping a blockchain sticker on it gets IBM salesmen a foot in the door to institutions who can’t evaluate the technology accurately in the first place. Unfortunately, even some teams doing public token offerings started to sell this deeply flawed approach to the public.
To scale Blockchain, sidechain or childchain solutions cannot be undermined. Sidechains are separate Blockchains that are linked to the main Blockchain using a two-way peg. They are an auxiliary network that executes the complementary function of: faster transactions, lower transaction costs and greater scalability in terms of the number of transactions that can be supported in a network at a given time.
For example, let’s say we have side chain 1 (SC1) and side chain 2 (SC2). A transaction occurs on SC1. A node in SC1 broadcasts the transaction to nodes in the main chain to record this transaction. The same node of SC1 calls a function from SC2 with a proof. The function in the nodes of SC2 verifies the proof on the main chain. The function gets executed.
@Tradle. Thanks for elaborating. I’m also thinking about these things – and hear lots of other people talk about them – but I *really* struggle with the concept. It all comes down to the table I drew in this post: https://gendal.me/2014/12/19/a-simple-model-to-make-sense-of-the-proliferation-of-distributed-ledger-smart-contract-and-cryptocurrency-projects/
"Proof of Work" used by Bitcoin is a competitive consensus algorithm. Each node races to solve a difficult puzzle first. Doing so earns the right to produce a block and you are rewarded in Bitcoin. The block is where the transaction (value of data) is written and confirmed. However, this race is a waste of time and money for those that don’t win. You get nothing unless you are the first to solve the puzzle. Since no one wants to lose, nodes started working together to solve the puzzle and share the reward based on your computational power (the hash rate).
Saying that, Interoperability has been the missing link in conquering the obstacles faced by both private and public blockchains by empowering them to interact and exchange values across platforms seamlessly. Developers use of the Gallactic blockchain technology, that allow for private and public blockchains within its eco-system, will drive the potential to combine both public and private blockchains with innovative new solutions, designed to accomplish cross-chain exchange and greater compatibility is the way forward for all parties and their concerns.
Jump up ^ Kopfstein, Janus (12 December 2013). "The Mission to Decentralize the Internet". The New Yorker. Archived from the original on 31 December 2014. Retrieved 30 December 2014. The network's 'nodes'—users running the bitcoin software on their computers—collectively check the integrity of other nodes to ensure that no one spends the same coins twice. All transactions are published on a shared public ledger, called the 'block chain.'
Instead of adding new features directly to the bitcoin blockchain, sidechains allow developers to attach new features to a separate chain. Since the chains are still attached to the bitcoin blockchain, the features can take advantage of the cryptocurrency's network effects and test those applications, without harming the main network should vulnerabilities arise.
Public blockchains: a public blockchain is a blockchain that anyone in the world can read, anyone in the world can send transactions to and expect to see them included if they are valid, and anyone in the world can participate in the consensus process - the process for determining what blocks get added to the chain and what the current state is. As a substitute for centralized or quasi-centralized trust, public blockchains are secured by cryptoeconomics - the combination of economic incentives and cryptographic verification using mechanisms such as proof of work or proof of stake, following a general principle that the degree to which someone can have an influence in the consensus process is proportional to the quantity of economic resources that they can bring to bear. These blockchains are generally considered to be "fully decentralized".
Instant Payments: Since the creation of Bitcoin there has been a race for faster transaction confirmations. Instant payments allow new use cases, such as retail store payments, and transactions in online games. RSK carefully chosen parameters and new theoretical protocols (such as DECOR+GHOST) allow creating blocks at 10 seconds average interval, with low stale block rate, and no additional centralization incentives.
Peer-to-peer blockchain networks lack centralized points of vulnerability that computer crackers can exploit; likewise, it has no central point of failure. Blockchain security methods include the use of public-key cryptography.:5 A public key (a long, random-looking string of numbers) is an address on the blockchain. Value tokens sent across the network are recorded as belonging to that address. A private key is like a password that gives its owner access to their digital assets or the means to otherwise interact with the various capabilities that blockchains now support. Data stored on the blockchain is generally considered incorruptible.
Fully private blockchains: a fully private blockchain is a blockchain where write permissions are kept centralized to one organization. Read permissions may be public or restricted to an arbitrary extent. Likely applications include database management, auditing, etc internal to a single company, and so public readability may not be necessary in many cases at all, though in other cases public auditability is desired.
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.
Plasma, a project by Ethereum, uses this side chain concept. It encourages transactions to happen on side chains (or child chains). An authority governs each of the child chains. If the authority starts acting maliciously, anyone on the child chain can quit the child chain and take back their pegged assets on the main chain. It’s in its early stages of development but shows a lot of promise in handling some of Ethereum’s scalability issues.
Sidechains, just like any other Blockchain, need their own miners to help protect them from nefarious actors and attacks which people would like to leverage against the network. However, since wealth isn't actually created on the Sidechain there is far less incentive for miners to actually work on it and help protect it. Because of this, transaction fees are the basic reward that is offered to miners. However, these often equate to mere pennies.
Blockchains that are private or permissioned work similarly to public blockchains but with access controls that restrict those that can join the network, meaning it operates like a centralised database system of today that limits access to certain users. Private Blockchains have one or multiple entities that control the network, leading to the reliance on third-parties to transact. A well-known example would be Hyperledger.