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.


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.
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.

Alpha functions as a sidechain to Bitcoins testnet. The peg mechanism currently works through a centralized protocol adapter, as stated in the sidechains whitepaper. An auditable federation of signers manages Testnet coins transferred to the sidechain. The federation is also relied upon to produce blocks through the signed blocks element. This creates the possibility of exploring the possibilities of the new chain using different security trade-offs.


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.
What if we could run heavy computations in a more centralized fashion, say on a single server, and then periodically integrate the results onto the main blockchain for posterity. We temporarily expose some vulnerability while the parallel server runs the heavy computation, but we get a massive benefit in that we don’t have to run the computation on chain, and simply need to store the results for future verification. This is the general premise behind Truebit. We won’t get into all the details of Truebit but there is a concept of challengers, who check to see the computations that were made have high fidelity.
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.
Step back from the details for moment and consider what’s been described.  We now have a way to move coins from Bitcoin onto another platform (a sidechain) and move them back again.   That’s pretty much what we do when we move them to a wallet platform or an exchange.  The difference is that the “platform” they’ve been moved to is also a blockchain… so it has the possibility of decentralised security, visibility and to gain from other innovation in this space.
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.
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Our Proof of Work tutorial talks about it in depth, but the best explanation might come from Satoshi Nakamoto himself. If the camps above start receiving messages that don’t agree, they rely on executing a Proof of Work. The Proof of Work is sufficiently complicated and requires significant computing power. Once one camp solves the Proof of Work, it broadcasts the results to the other camps. This message is now accepted in a chain of messages and the competing messages are dropped by the other camps.
The Blockstream Satellite network broadcasts the Bitcoin blockchain to the entire planet. The satellite network provides an opportunity for nearly 4 billion people without Internet access to utilize bitcoin while simultaneously ensuring bitcoin use is not interrupted due to network interruption. Utilizing the latest open source Software Defined Radio (SDR) technologies, the Blockstream Satellite network offers a breakthrough in the cost effectiveness of satellite communications.
In this case, you work directly with the given blockchain tools and stack. Assembly is required, so this isn’t for the faint of heart at this point, as many of the technologies are still developing and evolving. However, working directly with the blockchain provides a good degree of innovation, for example in building decentralized applications. This is where entrepreneurs are creating ambitious end-to-end, peer-to-peer applications, such as OpenBazaar (on Bitcoin), or Ujo Music (on Ethereum).
As an engineer and an entrepreneur, I truly believe blockchain technology is going to revolutionize the world. One of the biggest hurdles we need to tackle in the blockchain industry is scalability. Ethereum can only handle 15 transactions per second. I previously wrote about why that will prevent blockchain from going mainstream and how DAG could potentially be a winner.

There are promising works in sidechains like there can be transactions at higher speed and volume. For example micropayments can be done directly with minimal fee by using Lightning Network side chain. You won't have to wait for 10 minutes for miners to create a block. Or we can have privacy in our transactions by Zerocash side chain. If you want privacy, you send your bitcoin to sidechain and use Zerocash protocol for sending bitcoin to your recipient. This protocol makes your transaction not to be seen in the transaction history, at the same time it won't damage the integrity and security of the Bitcoin. If you use Zerocash protocol in your sidechain, you cannot be tracked anymore. By the way, test results say that its performance is very poor now, but I believe it will be better in the near future.


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.
A consortium blockchain is part public, part private. This split works at the level of the consensus process: on a consortium chain, a pre-selected group of nodes control the consensus process, but other nodes may be allowed to participate in creating new transactions and/or reviewing it. The specific configuration of each consortium chain (i.e., which nodes have the power to authorize transactions via the consensus process, which can review the history of the chain, which can create new transactions, and more) is the decision of each individual consortium.

The “three-part” transaction structure is very general but it only allows you to transfer ownership of Bitcoins. Some people would like to transmit richer forms of information across these sorts of systems. For example, a decentralized exchange needs a way for participants to place orders. Projects such as Mastercoin, Counterparty, NXT and others either build layers on top of Bitcoin or use entirely different codebases to achieve their goals.
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.
The sidechains vision of the future is of a vast globe-spanning decentralized network of many blockchains, an intertwined cable rather than a single strand, each with its own protocol, rules, and features — but all of them backed by Bitcoin, and protected by the Bitcoin mining network, as the US dollar was once backed by gold. Sidechains can also be used to prototype changes to the fundamental Bitcoin blockchain. One catch, though: this will require a small tweak to the existing Bitcoin protocol.
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Over the last year the concept of “private blockchains” has become very popular in the broader blockchain technology discussion. Essentially, instead of having a fully public and uncontrolled network and state machine secured by cryptoeconomics (eg. proof of work, proof of stake), it is also possible to create a system where access permissions are more tightly controlled, with rights to modify or even read the blockchain state restricted to a few users, while still maintaining many kinds of partial guarantees of authenticity and decentralization that blockchains provide. Such systems have been a primary focus of interest from financial institutions, and have in part led to a backlash from those who see such developments as either compromising the whole point of decentralization or being a desperate act of dinosaurish middlemen trying to stay relevant (or simply committing the crime of using a blockchain other than Bitcoin). However, for those who are in this fight simply because they want to figure out how to best serve humanity, or even pursue the more modest goal of serving their customers, what are the practical differences between the two styles?
In some cases, these advantages are unneeded, but in others they are quite powerful - powerful enough to be worth 3x longer confirmation times and paying $0.03 for a transaction (or, once scalability technology comes into play, $0.0003 for a transaction). Note that by creating privately administered smart contracts on public blockchains, or cross-chain exchange layers between public and private blockchains, one can achieve many kinds of hybrid combinations of these properties. The solution that is optimal for a particular industry depends very heavily on what your exact industry is. In some cases, public is clearly better; in others, some degree of private control is simply necessary. As is often the case in the real world, it depends.
Note: Some would argue that such a system cannot be defined as a blockchain. Also, Blockchain is still in it’s early stages. It is unclear how the technology will pan out and will be adopted. Many argue that private or federated Blockchains might suffer the fate of Intranets in the 1990’s, when private companies built their own private LANs or WANs instead of using the public Internet and all the services, but has more or less become obsolete especially with the advent of SAAS in the Web2.
“Further, contribution is weighted by computational power rather than one threshold signature contribution per party, which allows anonymous membership without risk of a Sybil attack (when one party joins many times and has disproportionate input into the signature). For this reason, the DMMS has also been described as a solution to the Byzantine Generals Problem[AJK05].”
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.
That might sound like a problem, but it isn’t because the box can only be opened infrequently (two or three times a year), and a super-majority of miners must leave a note on the box in advance. This note states exactly where the miners intend to transfer the money. The “correct” note is automatically generated by sidechain software, and is easy to check.
The differences between these types of blockchains are based on the levels of trust existing among the members of the network and the resulting level of security. Indeed, the higher the level of trust between the members of the network, the lighter the consensus mechanism (which aims to add the blocks to the blockchain securely). As we will see, there is no trust between the members of a public blockchain since it is open to everyone and inversely the confidence is much stronger on the private blockchain since members are pre-selected. In networks based on a blockchain, the level of trust among the members therefore directly impacts the structure and mechanisms of the network.
Public blockchains are just that, public. Anyone that wants to read, write, or join a public blockchain can do so. Public chains are decentralized meaning no one body has control over the network, ensuring the data can’t be changed once validated on the blockchain. Simply meaning, anyone, anywhere, can use a public blockchain to input transactions and data as long as they are connected to the network.
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