Put simply, sidechaining is any mechanism that allows tokens from one blockchain to be securely used within a completely separate blockchain but still moved back to the original chain if necessary. By convention the original chain is normally referred to as the "main chain", while any additional blockchains which allow users to transact within them in the tokens of the main chain are referred to as "sidechains". For example, a private Ethereum-based network that had a linkage allowing ether to be securely moved from the public Ethereum main chain onto it and back would be considered to be a sidechain of the public network.
“Blockchain could significantly reduce time delays and human mistakes, and monitor cost, labor, waste and emissions at every point in the supply chain. In the food sector, a manufacturer could automatically identify contaminated products in a matter of seconds and wouldn’t need to pull an entire product line from store shelves in the case of contamination.”
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.
This is justified by observing that, in our pre-sidechain world, miners always want things to be correct. In theory, the incentives of miners and investors are very strongly aligned: both are compensated most when the exchange rate is highest. And, in practice, we do not see large reorganizations (where miners can “steal”, by first depositing BTC to major exchanges, then selling that BTC for fiat (which they withdraw), and finally rewriting the last 3 or 4 days of chain history, to un-confirm the original deposits). These reorgs would devastate the exchange rate, as they would cast doubt on the entire Bitcoin experiment. The thesis of Drivechain is that sidechain-theft would also devastate the exchange rate, as it would cast doubt on the entire sidechain experiment (which would itself cast doubt on the Bitcoin experiment, given the anti-competitive power of sidechains).
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.
This is what, at its core, state channels are. Imagine we wanted to play a game of Starcraft and have a smart contract that pays 1 ETH to the winner. It would be ridiculous for each participant to have to write on the main Ethereum network each time a Zergling was killed by a Zealot, or when a Command Center was upgraded to an Orbital Command. The gas cost (Ethereum gas, not Starcraft gas) and time for each transaction would be prohibitive.
RSK is the first open-source smart contract platform with a 2-way peg to Bitcoin that also rewards the Bitcoin miners via merge-mining, allowing them to actively participate in the Smart Contract revolution. RSK goal is to add value and functionality to the Bitcoin ecosystem by enabling smart-contracts, near instant payments and higher-scalability.
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).

Performance at scale: It is not uncommon for large businesses to process 100,000’s of transactions per second (TPS). Therefore, enterprise blockchains need to scale so that they can deliver performance accordingly. To achieve this, they can compartmentalize processes using containers or similar approaches. Read more about this requirement in this article “Enterprise blockchain ready to go live”.
Walmart recently filed patents that could allow the retailer to store vendor and consumer e-commerce payment data using blockchain technology to improve security. This application would encrypt payment information in digital shopping systems and create a network able to automatically conduct transactions on behalf of a customer. The payments would be received by one vendor or more, depending on the services and who provided them.
Given all of this, it may seem like private blockchains are unquestionably a better choice for institutions. However, even in an institutional context, public blockchains still have a lot of value, and in fact this value lies to a substantial degree in the philosophical virtues that advocates of public blockchains have been promoting all along, among the chief of which are freedom, neutrality and openness. The advantages of public blockchains generally fall into two major categories:
The creation of sidechains have been a direct result of scalability issues associated with the main blockchain for projects such as Ethereum. Making sidechains increasingly popular way to speed up transactions. Lisk was the first decentralized application (dapp) to implement sidechains. With Lisk, each dapp created exists on its own sidechain without interfering with the mainchain.
Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries to include a proof of work. To prolong the blockchain, bitcoin uses Hashcash puzzles. While Hashcash was designed in 1997 by Adam Back, the original idea was first proposed by Cynthia Dwork and Moni Naor and Eli Ponyatovski in their 1992 paper "Pricing via Processing or Combatting Junk Mail".
The consortium or company running a private blockchain can easily, if desired, change the rules of a blockchain, revert transactions, modify balances, etc. In some cases, eg. national land registries, this functionality is necessary; there is no way a system would be allowed to exist where Dread Pirate Roberts can have legal ownership rights over a plainly visible piece of land, and so an attempt to create a government-uncontrollable land registry would in practice quickly devolve into one that is not recognized by the government itself. Of course, one can argue that one can do this on a public blockchain by giving the government a backdoor key to a contract; the counter-argument to that is that such an approach is essentially a Rube Goldbergian alternative to the more efficient route of having a private blockchain, although there is in turn a partial counter-argument to that that I will describe later.
A Sidechain, in simplest terms, is just a separate blockchain but is attached to the parent through the use of a two-way peg which allows for assets to be interchangeable and moved across the chain at a fixed deterministic exchange rate. This two-way peg works by utilizing simple payment verification or SPV as it's otherwise known. To show and prove ownership of the assets on the parent chain.
In order to spend them, you have to prove you’re entitled to do so. And you do that by providing the solution to a challenge that was laid down when they were sent to you in the first place. This challenge is usually just: “prove to the world that you know the public key that corresponds to a particular Bitcoin address and are in possession of the corresponding private key”. But it can be more sophisticated than that.
What Bitcoin’s development team is essentially doing through feature-creep is forcing everyone in the non-tech world to use Bitcoin through commercial proxies to avoid all this complexity (crypto-what? security? sidechain?), which effectively results in the loss of security, relative anonymity and decentralized properties that helped to make it interesting in the first place.
This type of permissioned blockchain model offers the ability to leverage more than 30 years of technical literature to realize significant benefits. Digital identity in particular, is fundamental for most industry use cases, be it handling supply chain challenges, disrupting the financial industry, or facilitating security-rich patient/provider data exchanges in healthcare. Only the entities participating in a particular transaction will have knowledge and access to it — other entities will have no access to it. Permissioned blockchains also permit a couple of orders of magnitude greater scalability in terms of transactional throughput.
×