Forbes reports that blockchain and biometric eyeball scanning technologies underpin the systems that support food distribution in the Syrian refugee crisis. While there are many further uses of blockchain, at the core of its business functionality is the creation of transparent, stacking “ledgers” of information. This is where private blockchain can prove extremely useful.
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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.
Jump up ^ Epstein, Jim (6 May 2016). "Is Blockchain Technology a Trojan Horse Behind Wall Street's Walled Garden?". Reason. Archived from the original on 8 July 2016. Retrieved 29 June 2016. mainstream misgivings about working with a system that's open for anyone to use. Many banks are partnering with companies building so-called private blockchains that mimic some aspects of Bitcoin's architecture except they're designed to be closed off and accessible only to chosen parties. ... [but some believe] that open and permission-less blockchains will ultimately prevail even in the banking sector simply because they're more efficient.
In September 2015, the first peer-reviewed academic journal dedicated to cryptocurrency and blockchain technology research, Ledger, was announced. The inaugural issue was published in December 2016.[91] The journal covers aspects of mathematics, computer science, engineering, law, economics and philosophy that relate to cryptocurrencies such as bitcoin.[92][93]

Sidechains, just like any other Blockchain, need their own miners to help protect them from nefarious actors and attacks which people would like to leverage against the network. However, since wealth isn't actually created on the Sidechain there is far less incentive for miners to actually work on it and help protect it. Because of this, transaction fees are the basic reward that is offered to miners. However, these often equate to mere pennies.
Elements Alpha functions as a sidechain to Bitcoin’s testnet, though the peg mechanism currently works through a centralized protocol adapter, as described in the Sidechains whitepaper. It relies on an auditable federation of signers to manage the testnet coins transferred into the sidechain via the “Deterministic Pegs” Element, and to produce blocks via the “Signed Blocks” Element. This makes it possible to immediately explore the new chain’s possibilities, using different security trade-offs. They plan to, in a later release, upgrade the protocol adapter to support fully decentralized merge-mining of the sidechain, and ultimately to phase in the full 2-way peg mechanism.
In September 2015, the first peer-reviewed academic journal dedicated to cryptocurrency and blockchain technology research, Ledger, was announced. The inaugural issue was published in December 2016.[91] The journal covers aspects of mathematics, computer science, engineering, law, economics and philosophy that relate to cryptocurrencies such as bitcoin.[92][93]
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.

Write permissions are kept centralized to one organization. Read permissions may be public or restricted to an arbitrary extent. Example applications include database management, auditing, etc. which are internal to a single company, and so public readability may in many cases not be necessary at all. In other cases public audit ability is desired. Private blockchains are a way of taking advantage of blockchain technology by setting up groups and participants who can verify transactions internally. This puts you at the risk of security breaches just like in a centralized system, as opposed to public blockchain secured by game theoretic incentive mechanisms. However, private blockchains have their use case, especially when it comes to scalability and state compliance of data privacy rules and other regulatory issues. They have certain security advantages, and other security disadvantages (as stated before).
The two-way peg is the mechanism for transferring assets between sidechains and is set at a fixed or predefined rate. Bitcoin’s Dynamic Membership Multi-Party Signature (DMMS) plays a vital role in the functionality of the two-way peg. The DMMS is one of Bitcoin’s lesser known but incredibly important components. It is a group digital signature — composed of the block headers in Bitcoin — that has no fixed size due to the computationally powered PoW nature of its blockchain. The Pegged Sidechain paper further describes it as:
A federation is a group that serves as the intermediary between a parent chain and its corresponding sidechain. It is an additional layer in the protocol but serves a key function and is what Blockstream’s Liquid sidechain uses. Due to the lack of expressiveness of Bitcoin’s scripting language, an externally implemented and mutually distrusting set of members form a federated peg.

The second option will be to use sidechains. Blockstream first announced side chain in 2014 and published its whitepaper (https://blockstream.com/sidechai...). I believe in the future, bitcoin will have its desired flexibility with its sidechains. The idea of the sidechain is you can innovate and design your solution freely in the sidechains. These sidechains are independent, if they are failed or hacked, they won't damage other chains. So damage will be limited within that chain, for that reason you can be less conservative. Otherwise you would be more risk averse, if you had 42.5 billion dollar market cap like Bitcoin.

Similarly, a side chain is a separate blockchain that runs in parallel to the main chain. The term is usually used in relation to another currency that’s pegged to the currency of the main chain. For example, staying with the Starcraft motif, say we had an in-game currency called Minerals (oh wait, we do!). We could allow players to peg their Ether (or ETH) to purchase more Minerals in-game. So we reserve some ETH on the main chain, and peg, say 500 Minerals to 1 ETH.
Security issues. Like the blockchain, the sidechain needs the work of miners to stay safe from attacks. Without sufficient power, the sidechain is vulnerable for assault. If hacked, only the sidechain will be damaged, while the main chain remains untouched and ready to continue work. If the main chain comes under the attack, the sidechain still operates, but without the value of the peg.
Recordemos, como hemos mencionado anteriormente, que actualmente son cientos los proyectos y monedas alternativas que trabajan con su propia cadena de bloques, totalmente desconectadas de la de Bitcoin. Todas con su cotización volatil. El problema de estas monedas es que ninguna de ellas dispone del efecto red ni de la seguridad que sí tiene Bitcoin. De hecho muchas, pese a haber implementado propuestas interesantes, se quedan en nada, con miles de horas y esfuerzo “tirado a la basura”. Incluso algunas de ellas han replicado el codigo de Bitcoin, pero también los fallos que en ese momento pudiera tener y mientras que en Bitcoin si se han solucionado, en esa Altcoin no.
Sidechains with specific purposes could be formed with specific features while still enjoying the widespread adoption and value that Bitcoin holds.  Most importantly it can add these features without consensus from the Bitcoin community. Sidechains have the potential to replace many Cryptocurrencies as it allows features that were previously unique to these currencies to be available on Bitcoin. It also allows developers to experiment with sidechains and scope its full potential while still keeping coins linked to Bitcoin.
Let us call the current Bitcoin System Bitcoin 1.0 and the sidechain Bitcoin 2.0 So one would take one unit of Bitcoin 1.0 and send it to an unspendable address (e.g. 1111111111111111111114bRaS3) they’d also submit cryptographic proof of the transaction signed by the same private key that sent the transaction as a transaction into Bitcoin 2.0. The protocol of Bitcoin 2.0 would entitle the user to receive one unit of Bitcoin 2.0  This is called “One-way Pegging” as the value of one Bitcoin 2.0 is equal to one Bitcoin 1.0.  This system is only one way and creates a wormhole by which Bitcoin 1.0 disappears as there is no way of getting it back.
“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, e.g. 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….
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.
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.
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.

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.


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Side-chain is another blockchain for one blockchain. To use side-chain of Bitcoin, for instance, you need to move BTC from the original chain to the side-chain. Then, BTC on the original chain is locked and the same amount of BTC on the side-chain appears. This is how BTC can be used/tested on another chain where we use some features different from the original ones.

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.
A public blockchain is a platform where anyone on the platform would be able to read or write to the platform, provided they are able to show the proof of work for the same. There has been a lot of activity in this space as the number of potential users that any technology in this space could generate is high.  Also, a public blockchain is considered to be a fully decentralized blockchain. Some of the examples are:
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.
Thus Tradle set out to build a meta-protocol that saves the data in the overlay network, and only puts minimal referencing data on the blockchain. There is a general grumpy consensus among bitcoin core devs and mining pool operators on allowing one small data chunk, a hash, per transaction. Many devs say it is not possible to secure this second overlay network. I agree, unless we use the blockchain to help with the task. We have a partial solution working, and are preparing a new design to improve it (partial, as it can not yet handle all known attacks). We are actively sharing the designs at various meetups (and on the github) and are inviting devs to find attack vectors and propose solutions. Tradle’s protocol not only relieves the pressure on bitcoin’s blockchain but is also able to handle larger transaction sizes than Counterparty and Mastercoin, so it can be used for complex identity, supply chain management and many other applications. It is also capable of handling attachment files, needed in the healthcare and financial industries.
Smart contracts are immutable pieces of code and their outcomes are irreversible. Hence, formal verification of their code is very important before deploying them. It’s very hard to verify smart contracts in the Ethereum Virtual Machine (EVM). A business can’t afford to deploy faulty but immutable smart contracts and suffer the consequences of their irreversible outcome. This article details the challanges: “Fundamental challenges with public blockchains”.
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.
A public blockchain has absolutely no access restrictions. Anyone with an internet connection can send transactions[disambiguation needed] to it as well as become a validator (i.e., participate in the execution of a consensus protocol).[84][self-published source?] Usually, such networks offer economic incentives for those who secure them and utilize some type of a Proof of Stake or Proof of Work algorithm.
You cannot be a crypto investor or entrepreneur without having a real understanding of the differences between these types of blockchains as well as their implications. Even if they are based on similar principles, their operation is, in fact, different to all levels. So the tokens issued by these blockchains will not be assessed in the same manner.
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There has been tremendous interest in blockchain, the technology on which Bitcoin functions. Nakamoto developed the blockchain as an acceptable solution to the game theory puzzle – Byzantine General’s Problem. This lead to a number of firms adopting the technology in different ways to solve real world issues, wherever there was an element of trust involved. Majority of them could be relating to the ability to provide proof of ownership – for documents, software modules/licenses, voting etc.
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”.
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
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.
2. Ardor’s Blockchain as a service platform for business: Ardor uses the Proof of Stake consensus mechanism. Ardor calls its sidechains ‘childchains’, and they are tightly integrated into the main chain. Security is enhanced because all transactions are processed and secured by parent chain forgers. Most transactions are pushed down to the childchain level, as the parent mainchain retains minimal features. Global entities such as assets and currencies across chains can be accessed through childchains.

Instead, what if the game was played in its own “channel”? Each time a player made a move, the state of the game is signed by each player. After an epic battle where the Protoss player takes out the remaining Zerg forces and forces a gg, the final state of the game (Protoss wins) is sent to a smart contract on the main chain. This neutral smart contract, known as a Judge, waits a while to see if the Zerg player disputes the outcome. If the Zerg player doesn’t, the Protoss player is paid the 1 ETH. </injects>
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