thank you for the clear explanation of this. so in essence, by locking bitcoins to a particular address we’ve created an asset (collateral). then on the other sidechain (marketplace) we get issued shares against the asset, which we can sell. anyone holding a share can then redeem it against the asset. I think that’s an analogy that finance types would get
It doesn’t matter if you’re moving $1bn or 0.01c across the Bitcoin network, you get the same security guarantees.   And you pay for this in fees and time.   What if you were prepared to trade safety for speed?   Today, your only real option is to send the coins to a centralized wallet provider, whom you must trust not to lose or steal your coins. You can then do all the transactions you like on their books, with their other customers and you never need touch the Bitcoin blockchain. But now you lose all the benefits of a decentralized value-transfer network.
Blockstream believes that to be secure, blockchain systems must be built with open source technology. Towards that goal, we've created the Elements Project, a community of people extending and improving the Bitcoin codebase. As open source, protocol-level technology, developers can use Elements to extend the functionality of Bitcoin and explore new applications of the blockchain. Join the expanding group of individual and corporate developers using Elements to build robust, advanced, and innovative blockchains.

Ethereum, a provider of decentralized platform and programming language that helps running smart contracts and allows developers to publish distributed applications. Factom, a provider of records management, record business process for business and governments. Blockstream, a provider of sidechain technology, focused on extending capabilities of Bitcoin. The company has started experimenting on providing accounting (considered a function to be done on private blockchain) with the use of public blockchain technology.


The great thing about Bitcoin, for a tech columnist like me, is that it’s simultaneously over-the-top cinematic and technically dense. Richard Branson recently hosted a “Blockchain Summit” at his private Caribbean island. There’s a Bitcoin Jet. At the same time, 2015 has seen the release of a whole slew of technically gnarly–and technically fascinating–proposals built atop the Bitcoin blockchain.
2) Yes – I had to keep things short/simple in this intro article in order to get across the key ideas. But you’re right: the sidechains need to be secured. But how that happens is a matter for the sidechain. If somebody can produce a false “proof” that the locked Bitcoins should be released on the Bitcoin side then that’s a problem for the sidechain, of course (somebody presumably just had their coins stolen!) but it’s irrelevant (at a macro level) on the Bitcoin side.
"I see quite a few use cases for private blockchains, and they definitely have their place. Traditional institutions won't switch to a completely public blockchain from one day to the other. A private blockchain is a great first step towards a more cryptographic future. The biggest advantages of private blockchains in comparison to centralized databases are the cryptographic auditing and known identities. Nobody can tamper with the data, and mistakes can be traced back. In comparison to a public blockchain it is much faster, cheaper and respects the company's privacy. As a conclusion, it's better to rely on a private blockchain than no cryptographic system at all. It has merits and pushes the blockchain terminology into the corporate world, making truly public blockchains a bit more likely for the future." 

@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/
NPD said the next step for retailers is to develop their own cryptocurrency to prevent customers from having to use credit cards when shopping online. NPD said the practice makes sense for the retailer, because if the customer could send the payment transfer via blockchain, it would avoid third-party clearing house fees retailers pay for processing card payments.

Aelf uses a consensus algorithm called DPoS (Delegated Proof of Stake) that takes the best of both cooperative and competitive consensus algorithms. DPoS uses votes from stakeholders to achieve consensus. The competitive part is larger stakeholders having an influence on their delegate of choice. The delegates that have the most votes will take their turn to produce a block cooperatively in a sequence. DPoS makes transactions permanent. A rollback isn’t possible so a confirmation can be fast. DPoS is also scalable because anyone can participate in the consensus. Additionally, DPoS is environmentally friendly because electricity isn’t wasted like in Proof of Work.
A side-chain is a secondary blockchain layer designed to facilitate lower-cost and/or higher-speed transactions between two or more parties. One case in which they're often deployed is between parties who make many transactions amongst each other. Committing all of those transactions to the public blockchain would may undesirable for cost or other reasons, so the side-chain's job in this example would be to aggregate the activity into the least transactional activity necessary to reflect the final state of the side-chain's ledger.

In simple terms, public blockchains can receive and send transactions from anybody in the world. They can also be audited by anybody, and every node has as much transmission power as any other. Before a transaction is considered valid, it must be authorized by each of its constituent nodes via the chain’s consensus process. As long as each node abides by the specific stipulations of the protocol, their transactions can be validated, and thus add to the chain


Blockstream has also released an “Alpha” sidechain with all of those features up and running except the last, coupled to the Bitcoin testnet. (Used for testing Bitcoin software without putting real value at risk.) In the absence of the Bitcoin protocol change that will cryptographically secure the programmatic transfer of value between Bitcoin and sidechains, they’re cooperating with several external organizations to perform and validate those transfers. If and when that protocol change happens, though, pegged sidechains will be as permissionless, and as decentralized, as Bitcoin itself.
Many people believe this is the future of the blockchain. It maintains network security and allows for scalability. The biggest criticism is that it heavily favors those with more funds as smaller holders have no chance of becoming witnesses. But the reality is, smaller players have no hope of participating in Proof of Work either, as mining from your own laptop at home is no longer a reality. Smaller players get outcompeted by bigger players who have massive mining rigs. STEEM and EOS are examples of DPOS blockchains. Even Ethereum is moving to POS with its Casper project.
Eris Industries, aims to be the provider of shared software database using blockchain technology. Blockstack, aims to provide financial institutions back office operations, including clearing & settlement on a private blockchain. Multichain, provider an open source distributed database for financial transactions. Chain Inc., a provider of blockchain API's. Chain partnered with Nasdaq OMX Group Inc., to provide a platform that enables trading private company shares with the blockchain.
Many blockchain enthusiasts believe in the value of networks that are not only decentralized — which most closely resembles the current model of the Internet — but distributed. This includes Tim Berners-Lee, who founded the World Wide Web in 1989. Berners-Lee has proposed that blockchains can be used to reinvent the web in a more distributed and peer-to-peer fashion.
Of course, the drawbacks of public and private blockchains are still very much present in the case consortium chains. This all depends on the way each consortium is constructed: a more public consortium chain will bear the burdens of public chains, while a more private one might suffer from the relative lack of openness and disintermediation. The right configuration depends on the needs and vision for each specific chain. Strategy and tailoring are always necessary to get the best solution.
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.
My chief concern is not with the concept of side chains per se (yet). I have still much to learn about how they are being considered. I am only concerned with the way the concept is being presented here. However, I am sure that much of this was due to space restrictions as much as anything. The concept of side chains is an intriguing one. It is also clearly attempting to address a major problem with the whole Bitcoin scheme- namely the verification latency it introduces for transactions. This is only one of the hurdles facing Bitcoins acceptance into the world of commerce, but it is a considerable one.
@tetsu – not sure what you mean. My reading of the sidechains paper is that the worst case scenario is that an attacker manages to “reanimate” Bitcoins on the main blockchain that had been sent to the sidechain… but that would be the attacker stealing the coins from the rightful owner on the sidechain. From Bitcoin’s perspective, the coins were always going to be reanimated…. so the risk is entirely borne by the holder(s) on the sidechain. Am I missing something?
Sidechain is a blockchain that runs parallel to the main blockchain. It extends the functionality of interplorable blockchain networks. Interpolable blockchain networks signifies the ability to share data between different computer systems on different machines. It means that data can be sent and received between interconnected networks eliminating the possibility of negative impact to the networks. Sidechain enables this to be done in a decentralised manner to transfer and synchronise tokens between two chains.
In private blockchains, only specific, pre-chosen entities have the ability to create new transactions on the chain (this is known as “write permissions”). Thus, a private blockchain is a closed network that offers constituents the benefits of the technology, but is not necessarily decentralized or distributed, even among its members. The extent to which each constituent can view (“read”) and create and validate transactions (“write”) is up to the developers of the chain.
The great thing about Bitcoin, for a tech columnist like me, is that it’s simultaneously over-the-top cinematic and technically dense. Richard Branson recently hosted a “Blockchain Summit” at his private Caribbean island. There’s a Bitcoin Jet. At the same time, 2015 has seen the release of a whole slew of technically gnarly–and technically fascinating–proposals built atop the Bitcoin blockchain.

This list is not exhaustive. There are plenty of public blockchains, and they are actively adopted by such industries as FinTech, gaming, logistics, and beyond. However, it not always makes sense to move certain processes and businesses to the public network as the latter are characterized by comparatively low speed of transactions execution and high costs. Indeed, every transaction requires a consensus of the entire network. Unfortunately, it takes time and resources.
Using Rootstock as an example, in order to transfer assets from one chain to the other a user on the parent first has to send their coins to a special output address where they will consequently become locked and un-spendable. Once the transaction is completed, SPV then confirms it across the chains and after waiting out a contest period, which is just a secondary method to help prevent double spending, the equivalent amount will be credited and spendable on the Sidechain and vice versa.

And now for the second clever part. The logic above is symmetric. So, at any point, whoever is holding these coins on the sidechain can send them back to the Bitcoin network by creating a special transaction on the sidechain that immobilises the bitcoins on the sidechain. They’ll disappear from the sidechain and become available again on the Bitcoin network, under the control of whoever last owned them on the sidechain.
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.'
Blockchain-based smart contracts are proposed contracts that could be partially or fully executed or enforced without human interaction.[55] One of the main objectives of a smart contract is automated escrow. An IMF staff discussion reported that smart contracts based on blockchain technology might reduce moral hazards and optimize the use of contracts in general. But "no viable smart contract systems have yet emerged." Due to the lack of widespread use their legal status is unclear.[56]
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