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.”

The Bitcoin White Paper was published by Satoshi Nakamoto in 2008; the first Bitcoin block got mined in 2009. Since the Bitcoin protocol is open source, anyone could take the protocol, fork it (modify the code), and start their own version of P2P money. Many so-called altcoins emerged and tried to be a better, faster or more anonymous than Bitcoin. Soon the code was not only altered to create better cryptocurrencies, but some projects also tried to alter the idea of blockchain beyond the use case of P2P money.
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.
A user on the parent chain first has to send their coins to an output address, where the coins become locked so the user is unable to spend them elsewhere. Once the transaction has been completed, a confirmation is communicated across the chains followed by a waiting period for extra security. After the waiting period, the equivalent number of coins is released on the sidechain, allowing the user to access and spend them there. The reverse happens when moving back from a sidechain to the main chain.
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The public blockchain is open to anyone who wants to deploy smart contracts and have their executions performed by public mining nodes. Bitcoin is one of the largest public blockchain networks today. As such, there is limited privacy in the public blockchain. Mining nodes in the public blockchain requires a substantial amount of computational power to maintain the distributed ledger at a large scale. In the Ethereum public blockchain, smart contract codes can be viewed openly.


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A private blockchain on the other hand provides only the owner to have the rights on any changes that have to be done. This could be seen as a similar version to the existing infrastructure wherein the owner (a centralized authority) would have the power to change the rules, revert transactions, etc. based on the need. This could be a concept with huge interest from FI’s and large companies. It could find use cases to build proprietary systems and reduce the costs, while at the same time increase their efficiency. Some of the examples could be:

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Cuando esta transacción recibe las suficientes confirmaciones, se manda una notificación a la otra cadena de bloques (la que tú quieres utilizar) en el que se adjunta la prueba de que las monedas han sido enviadas por ti a esa dirección especial de la red. Tras ello, en la sidechain se creará, de forma automática, el mismo número exacto de activos que bitcoins se mandaron, dándote a ti el control de los mismos. Es decir, replica en el nuevo activo la cuantía que has enviado de la cadena principal a la sidechain. ¡Muy importante! Recordar que no se han creado o destruido nuevos bitcoins. Simplemente se han movido hasta que no estén usándose en la sidechain.
Public blockchains are also expensive, and not just in terms of money. The time and energy required to process transactions on public chains is more intensive than that of non-public chains. This is because every single node on the chain must authorize each new transaction before it is added to the chain, which requires a large amount of electricity and time (not to mention money).
Liquid is the world's first federated sidechain that enables rapid, confidential, and secure bitcoin transfers. Participating exchanges and Bitcoin businesses deploy the software and hardware that make up the Liquid network, so that they can peg in and out of the Bitcoin blockchain and offer Liquid’s features to their traders. Liquid provides a more secure and efficient system for exchange-side bitcoin to move across the network.

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.
Private blockchains are valuable for solving efficiency, security and fraud problems within traditional financial institutions, but only incrementally. It’s not very likely that private blockchains will revolutionize the financial system. Public blockchains, however, hold the potential to replace most functions of traditional financial institutions with software, fundamentally reshaping the way the financial system works.
The need and applications for side chains vary greatly, but Aelf is building an entire infrastructure that allows businesses to customize their chains depending on needs. Financial, insurance, identity and smart city services are a few applications which need their own side chains. Interoperability between those chains is critical. Aelf is paving the way for a new internet infrastructure.
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.
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.
Frankly, secure implementation of Bitcoin is already a pain in the ass .. adding more complexity just seems like the wrong move at this point. It’s already trying to be a currency, a networking protocol and a client in the same codebase. Adding turing complete (or not) scripts with arbitrary outcomes, multiple versions of the official client cooperating, multiple clients, and now multiple blockchains is basically the nail in the coffin in terms of widespread implementation.
It might seem that this technology is beneficial for any business, but it is not. Quite often projects fail to justify their will of public or private blockchain implementation. The key reason to use blockchain is the inefficiency of existing centralized solution that is slow, expensive, and lacks transparency and reliability. In other cases, blockchain isn’t required.
As you know, we at LTP have been doing a lot of research to understand other use cases of blockchain apart from Bitcoin-based payments. Recently we had released a comprehensive analysis of 50+ startups and 20 use-cases of blockchain. Though there have been news of large companies accepting bitcoin (Ex.: Amazon, Microsoft, Dell) and the overall acceptance reaching a 100,000+ merchants figure, upon deeper examination we realize that large corporations do not store the Bitcoin payments. They generally partner with a Bitcoin payment processor who converts the Bitcoins to cash as and when they receive a payment and this converted amount is what the corporates take into their account. What a bummer!
Setting up an environment to test and research blockchain requires an ecosystem with multiple systems to be able to develop research and test. The big players in the cloud industry like Amazon(AWS), Microsoft(Azure), IBM(BlueMix) have seen the potential benefits of offering blockchain services in the cloud and started providing some level of BaaS to their customers. Users will benefit from not having to face the problem of configuring and setting up a working blockchain. Hardware investments won’t be needed as well. Microsoft has partnered with ConsenSys to offer Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure. IBM(BueMix) has partnered with Hyperledger to offer BaaS to its customers. Amazon announced they would be offering the service in collaboration with the Digital Currency Group. Developers will have a single-click cloud-based blockchain developer environment, that will allow for rapid development of smart contracts.
Structure Side chains are independent blockchains that have a kind of "pegging mechanism", where at least one of the chains (main chain and side chain) is "aware" of the other chain and both tokens are pegged at a set ratio. Side chains need their own network security and block processing. "Child Chains" of the Ardor platform are tightly integrated into the main Ardor parent chain. All transactions are processed and secured by the parent chain forgers. This makes cross-chain transactions possible. Pruning will be enabled on child chain transactions in order to significantly reduce blockchain bloat by pruning the transactions on regular basis from the blockchain.
The block time is the average time it takes for the network to generate one extra block in the blockchain.[27] Some blockchains create a new block as frequently as every five seconds.[28] By the time of block completion, the included data becomes verifiable. In cryptocurrency, this is practically when the transaction takes place, so a shorter block time means faster transactions. The block time for Ethereum is set to between 14 and 15 seconds, while for bitcoin it is 10 minutes.[29]
The original Litecoin we started out with are now Rootstock Litecoin, which I can use for creating smart contracts and as previously mentioned Sidechains can exist for all types of digital assets with propositions of not only smart contracts but the ability to provide more freedom for experimentation with Beta releases of core software and Altcoins, as well as the taking over of traditional banking instruments such as the issuing and tracking of shares, bonds and other assets.
Things get a bit more interesting when you replace the single custodian with a federation of notaries by way of a multisignature address. In this model, a federation of entities must sign-off on movements to and from the sidechain, so more parties must be compromised for a failure situation to unfold where the bitcoins frozen on the main chain are stolen.

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.


Plasma is a proposed framework for incentivized and enforced execution of smart contracts which is scalable to a significant amount of state updates per second (potentially billions) enabling the blockchain to be able to represent a significant amount of decentralized financial applications worldwide. These smart contracts are incentivized to continue operation autonomously via network transaction fees, which is ultimately reliant upon the underlying blockchain (e.g. Ethereum) to enforce transactional state transitions.
Las sidechains son otro de los conceptos más famosos entorno a Bitcoin, no los pierdas de vista. La teoría indica que permitirían añadir funcionalidades nuevas a Bitcoin, pero sin necesidad de modificar constantemente el código de éste, ya que la funcionalidad es desarrollada utilizando otra cadena de bloque para finalmente ser conectada a la de Bitcoin. Al mismo tiempo esto evitaría la saturación de una sola cadena de bloques, como actualmente ocurre, al utilizar cadenas diferentes para cada caso de uso.
When blockchain technology was introduced to the public in 2008 (via Satoshi Nakamoto’s famous white paper), it would have been hard to predict that private or consortium blockchains would become popular. But recently, there’s been a lot of buzz about this in the digital currency community. Many companies are beginning to experiment with blockchain by implementing private and consortium chains, although some people are critical of this. This discussion not only centers on use cases and benefits, but whether non-public blockchains are an appropriate application of the protocol to begin with.