Counterfeiting items is a $1.2 trillion global problem, according to Research and Markets 2018 Global Brand Counterfeiting Report. The rise of online commerce and third-party marketplace sellers have made the crime more prevalent in recent years. Blockchain technology can help consumers verify what they ordered online and what they receive in the mail is what they intended to purchase.
So if you want to create a more secure Sidechain, we would seriously need to have a look at incentivizing miners in other ways. These could include things such as the Sidechain raising outside funding from investors in order to pay the miners. Staggering mining award so miners have an incentive to keep mining as they will be paid later on rather than at the time or the Sidechain could issue its own mining award on top of the already existing transaction fees and essentially just become an Altcoin.
Public blockchains are open, and therefore are likely to be used by very many entities and gain some network effects. To give a particular example, consider the case of domain name escrow. Currently, if A wants to sell a domain to B, there is the standard counterparty risk problem that needs to be resolved: if A sends first, B may not send the money, and if B sends first then A might not send the domain. To solve this problem, we have centralized escrow intermediaries, but these charge fees of three to six percent. However, if we have a domain name system on a blockchain, and a currency on the same blockchain, then we can cut costs to near-zero with a smart contract: A can send the domain to a program which immediately sends it to the first person to send the program money, and the program is trusted because it runs on a public blockchain. Note that in order for this to work efficiently, two completely heterogeneous asset classes from completely different industries must be on the same database - not a situation which can easily happen with private ledgers. Another similar example in this category is land registries and title insurance, although it is important to note that another route to interoperability is to have a private chain that the public chain can verify, btcrelay-style, and perform transactions cross-chain.

Another promise of sidechains is the ability to have a stronger and faster mainchain, as transactions can happen on one of the sidechains. If users or developers are dissatisfied with the costs of sending a transaction and the transaction speed of the mainchain, they can use and or deploy their dapp on one of the sidechains. This leads to a more diversified network and a stronger, faster and more robust mainchain.

Ethereum is an open-source blockchain platform that allows anyone to build and use decentralized applications running on blockchain technology. Ethereum is a programmable blockchain - it allows users to create their own operations. These operations, coded as Smart Contracts, are deployed and executed by the Ethereum Virtual Machine (EVM) running inside every node.
The Loom Network recently released their SDK which supports what they call “Dappchains,” an Ethereum layer-2 sidechain solution with each sidechain comprised of their own DPoS consensus mechanism. This enables highly scalable dapps, specifically games built using their tools. Loom emphasizes the earlier comment about sidechains enabling innovation in scalability, rather than providing it directly. Loom’s sidechains have their own set of rules and are used to offload computation from the primary Ethereum chain. Their sidechains are application-specific, meaning that they enable highly scalable dapps through an efficient consensus mechanism and can periodically be settled on the main Ethereum chain depending on their security needs. You can find more information on their model here.
Byzantine fault tolerance (BFT) is what keeps the blockchain fundamentally secure. For simplicity, let’s say there were 100 nodes in a blockchain network (there are currently about 10,500 full Bitcoin nodes in the world). What happens when one node wants to tamper with the latest block and say other Bitcoin users sent him a whole bunch of Bitcoin when they really didn’t?
When you send Bitcoins somewhere, you lay down the challenge for the next owner. Usually, you’ll simply specify that they need to know the public and private keypair that correspond to the Bitcoin address the coins were sent to. But it can be more complicated than that. In the general case, you don’t even know who the next owner is… it’s just whoever can satisfy the condition.
Perhaps blocks are created faster on that sidechain. Perhaps transaction scripts are “turing complete”. Perhaps you have to pay fees to incent those securing that sidechain. Who knows. The rules can be whatever those running that sidechain want them to be. The only rule that matters is that the sidechain agrees to follow the convention that if you can prove you put some Bitcoins out of reach on the Bitcoin network, the same number will pop into existence on the sidechain.
Sidechain is a chain of blocks based on the main parental blockchain. Sidechains realize the new financial ecosystems via integration into Bitcoin. Relatively new to Bitcoin, the sidechain is an extension that enables the ability both to build a link between BTC and an altcoin and to create new independent services that work via the main Bitcoin blockchain. Using sidechains allows for the creation of various types of smart contracts, stocks, derivatives, etc. It is possible to develop a limitless number of Bitcoin or Ethereum-based sidechains with different tasks and features, assets of which will depend on the main blockchain’s volatility. It allows traditional blockchains to support several kinds of assets, payments, smart contracts and also to increase the level of security and anonymity of transactions.
These kinds of blockchains are forks of the original implementations but deployed in a permissioned manner. Mainly hyped because the companies behind these chains want to onboard corporations in order to generate buzz around their their chain. It’s tolerable for proof of concepts or if they plan to move to public as soon as possible; otherwise they are just using the wrong set of tools for the job.
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.

As we’ve talked about, writing to the blockchain is slow and expensive. This is because every node in the entire network needs to verify and slurp in the whole blockchain and all the data it contains. Executing a large smart contract on a blockchain can be prohibitively expensive, and doing things like storing images on blockchains is economically infeasible.
A side-chain is a separate block-chain that runs parallel to the main chain, for example the Bitcoin network, and is attached to the main chain through a simple two-way peg, or special 'address'. A user sends coins to this special address and this amount is effectively 'locked' out from use on the main chain and available on the side chain. This currency is released back to the main chain once its been proven that the side chain is no longer using it.
Note: This is also a pioneering effort towards increased adoption of smart contracts because while the traditional contracts have been around for a long time, smart contracts are relatively new, and there are gaps in how they are structured. If the smart contracts have the necessary legal expressions then that could serve as a template to bridge this gap in future.

This construction is achieved by composing smart contracts on the main blockchain using fraud proofs whereby state transitions can be enforced on a parent blockchain. We compose blockchains into a tree hierarchy, and treat each as an individual branch blockchain with enforced blockchain history and MapReducable computation committed into merkle proofs. By framing one’s ledger entry into a child blockchain which is enforced by the parent chain, one can enable incredible scale with minimized trust (presuming root blockchain availability and correctness).

The first question to answer is “What is public blockchain?” The very name of this type of networks implies that they are open and permissionless. It means that anyone in the world can join the network, add blocks and view the information stored there. Indeed, public blockchains are totally transparent as any of their members can audit them. For this reason, independent participants can easily agree on transactions without middlemen and the fear of deception.
The top 10 Ethereum decentralized apps (DApps) have daily active user counts in the thousands. Compare this with a centralized platform like Facebook, which has over a billion daily users, and you can see just how small scale blockchain use still remains. For a detailed comparison, read “State of the DApps: 5 Observations From Usage Data (April 2018)”.
The paper outlines some critical developments and associated problems that were both currently trending and forward-thinking at the time, many of them still very much relevant today. At the time, altcoins were quickly gaining prominence and the problems associated with their volatility, security, and lack of interoperability with Bitcoin raised concerns. The paper primarily addressed 6 issues that pegged sidechains aimed to provide a solution:

ELEKS helps clients transform their businesses digitally by providing expert software engineering and consultancy services. We deliver high tech innovations to Fortune 500 companies, big enterprises and technology challengers, improving the ways they work and boosting the value they create for the modern world.   Our 1,100+ professionals located in the Delivery Centers across Eastern Europe and sales offices in Europe, the US and Japan ... Read more
Sidechains as an idea have existed and had been floating around for quite some time now, the bases is to extend the decentralization of trust into other sectors and to other digital assets. However, while this all sounds great it's a perfect example of good in theory but not so much in practice. Nevertheless, this hasn't stopped people from trying with groups such as Blockstream exploring the idea and our friends over at Rootstock co-creating a Sidechain which is allowing Litecoin and Bitcoin to execute smart contracts and all without changing the core software of the original currency.
ELEKS helps clients transform their businesses digitally by providing expert software engineering and consultancy services. We deliver high tech innovations to Fortune 500 companies, big enterprises and technology challengers, improving the ways they work and boosting the value they create for the modern world.   Our 1,100+ professionals located in the Delivery Centers across Eastern Europe and sales offices in Europe, the US and Japan ... Read more
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.

Perhaps blocks are created faster on that sidechain. Perhaps transaction scripts are “turing complete”. Perhaps you have to pay fees to incent those securing that sidechain. Who knows. The rules can be whatever those running that sidechain want them to be. The only rule that matters is that the sidechain agrees to follow the convention that if you can prove you put some Bitcoins out of reach on the Bitcoin network, the same number will pop into existence on the sidechain.
Another technology that could see more widespread use in the coming years is side chains. A side chain is defined for one specific use case. There can be multiple side chains where different tasks are distributed accordingly for improving the efficiency of processing. Maybe one application needs to optimize for high speeds and another needs to optimize for large computations. In any case, side chains can be used to handle commercial blockchain usage. CryptoKitties would have greatly benefitted from an optimized high-speed side chain. At one point, they jammed up the Ethereum blockchain with 25% of all transactions coming from their application.
Public chains to the rescue! Public chains offer public transaction data that can be verified in real-time by anybody that cares to run a node. The more independent users or institutions that take part in verification, the more secure and decentralised the chain becomes! At Iryo, we strive to have every clinic doing full validation of the global state for the relevant smart contracts (EOS based). Public blockchains are mainly useful for two things; value routing (including initial creation and distribution) and trustless timestamping of messages.
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.

Sometimes separate blocks can be produced concurrently, creating a temporary fork. In addition to a secure hash-based history, any blockchain has a specified algorithm for scoring different versions of the history so that one with a higher value can be selected over others. Blocks not selected for inclusion in the chain are called orphan blocks.[22] Peers supporting the database have different versions of the history from time to time. They keep only the highest-scoring version of the database known to them. Whenever a peer receives a higher-scoring version (usually the old version with a single new block added) they extend or overwrite their own database and retransmit the improvement to their peers. There is never an absolute guarantee that any particular entry will remain in the best version of the history forever. Because blockchains are typically built to add the score of new blocks onto old blocks and because there are incentives to work only on extending with new blocks rather than overwriting old blocks, the probability of an entry becoming superseded goes down exponentially[23] as more blocks are built on top of it, eventually becoming very low.[1][24]:ch. 08[25] For example, in a blockchain using the proof-of-work system, the chain with the most cumulative proof-of-work is always considered the valid one by the network. There are a number of methods that can be used to demonstrate a sufficient level of computation. Within a blockchain the computation is carried out redundantly rather than in the traditional segregated and parallel manner.[26]
Confidential Transactions — At present, all Bitcoin transactions are completely public, albeit pseudonymous. Confidential Transactions, as the name implies, conceal the amount being transferred to all except the sender, the recipient, and others they designate. The resulting transaction size is significantly larger, but includes a sizable “memo” field that can be used to store transaction or other metadata, and is still smaller than eg Zerocoin.(Note that this isn’t as confidential as Zerocash, which conceals both the amount and the participants involved in any transaction, through the mighty near-magic of zk-Snarks. Mind you, Zerocash would require an esoteric invocation ritual to initiate its network. No, really. But that’s a subject for a separate post.)
The main point of a side-chain is to allow cryptocurrency networks to scale and interact with one-another. For example alt-coins and Bitcoin run on separate chains, however side chains allow for these separate currencies to be transferred through these two-way 'portal's or interfaces via a fixed conversion amount. Added benefits of side-chains are different asset classes like,stocks, bonds etc being integrated through a converted price onto the main chain, along with additional functionality like smart contracts,unique D-Apps, micro-payments and security updates that can be later incorporated into the primary network from these side-chains.
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As we’ve talked about, writing to the blockchain is slow and expensive. This is because every node in the entire network needs to verify and slurp in the whole blockchain and all the data it contains. Executing a large smart contract on a blockchain can be prohibitively expensive, and doing things like storing images on blockchains is economically infeasible.
A consortium blockchain is often said to be semi-decentralized. It, too, is permissioned but instead of a single organization controlling it, a number of companies might each operate a node on such a network. The administrators of a consortium chain restrict users' reading rights as they see fit and only allow a limited set of trusted nodes to execute a consensus protocol.
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.
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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).
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