Pegged sidechains employ a two-way peg to transfer assets between chains, and they consist of providing proof of possession in the transferring transactions. The idea is to enable the capability of locking an asset on an original parent chain, which can then be transferred to a sidechain before eventually being redeemed on the original chain. Notably, the original asset on the parent chain is locked in a specific output address and is not destroyed like early implementations of sidechains.
Public blockchains: a public blockchain is a blockchain that anyone in the world can read, anyone in the world can send transactions to and expect to see them included if they are valid, and anyone in the world can participate in the consensus process - the process for determining what blocks get added to the chain and what the current state is. As a substitute for centralized or quasi-centralized trust, public blockchains are secured by cryptoeconomics - the combination of economic incentives and cryptographic verification using mechanisms such as proof of work or proof of stake, following a general principle that the degree to which someone can have an influence in the consensus process is proportional to the quantity of economic resources that they can bring to bear. These blockchains are generally considered to be "fully decentralized".
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We use node 2 to receive a payment of 200 via the smart contract function, receivePayment(). Note that the receivePayment() function can accept a second parameter for the account address that is used to create this transaction. (Note that you can also set web3.eth.defaultAccount = "<…account address…>", after which you can just call receivePayment(200) with one parameter.)
Eris Industries, aims to be the provider of shared software database using blockchain technology. Blockstack, aims to provide financial institutions back office operations, including clearing & settlement on a private blockchain. Multichain, provider an open source distributed database for financial transactions. Chain Inc., a provider of blockchain API's. Chain partnered with Nasdaq OMX Group Inc., to provide a platform that enables trading private company shares with the blockchain.
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.
@gendal I am discussing private chains with prospects, so my interest is not superficial and theoretical. I see the benefits for the organization in using the private chain as another form of internal database, with better security properties. It can also be used where a service bus product would be today, to facilitate integration, conformance, monitoring, audit. Private chain can also, via a two way peg, be connected to the main chain, achieving a form of public/private network divide that routers created for us in the early stages of the Internet development. Anything else on the benefits side that I missed?
Start mining on node 1 by using the function miner.start(1), where 1 refers to the number of threads. Note that the miner.start(n) function will always return "null." Unless you have many CPU cores, keep the thread number low to avoid high CPU usage. Note that mining without any pending transaction can still earn your default account incentive (ETH). It creates empty blocks, thus strengthening the integrity of the blockchain tree.

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:
At Iryo, we consider databases and blockchains that are not opened to the public to be insecure they, can easily be altered by the business running it, at their discretion and it goes against the ethos of the open and transparent cryptocurrency space. Designed to keep public out and introducing “trusted” middlemen, private chains forget that trusted third parties are security holes.
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.
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”.
Eris Industries, aims to be the provider of shared software database using blockchain technology. Blockstack, aims to provide financial institutions back office operations, including clearing & settlement on a private blockchain. Multichain, provider an open source distributed database for financial transactions. Chain Inc., a provider of blockchain API's. Chain partnered with Nasdaq OMX Group Inc., to provide a platform that enables trading private company shares with the blockchain.
Bitcoin blockchain design has been done for a specific purpose, and this is a money (crypto currency) transfer. But what will we do, if we want to change or add some functions of the bitcoin blockchain? What if we want to transfer other assets rather than money, what if we want to do transactions automatically when pre-determined events occurred. Or what if we don't want other people see our transactions, or track our transactions' history. You can ask countless of what if questions and every answer to these questions drive you to a different blockchain or configurations

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.

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.
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.
By design, a blockchain is resistant to modification of the data. It is "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way".[7] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. Decentralized consensus has therefore been claimed with a blockchain.[8]

External Account, which stores ETH balance – This contains the address of the User that was created using the Web3.js API, e,g, personal.newAccount(…). These accounts are used for executing smart contract transactions. ETH is your incentive received for using your account to mine transactions. The address of the account is the public key, and the password of the account is the private key.
@tradles – thanks for taking the time to explain this. OK – so I get the debate around blockchain bloat and the (grudging) inclusion of OP_RETURN, etc., but what I’m missing is that I can only really see one scenario where embedding any identity data into the blockchain makes sense…. and that’s when I want to *associate* an identity with a transaction I’m performing.
Blockchain was invented by Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin.[1] The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications,[1][3] and blockchains which are readable by the public are widely used by cryptocurrencies. Private blockchains have been proposed for business use. Some marketing of blockchains has been called "snake oil".[9]
We provide services in Custom Software development, High-end E-Commerce portals, SaaS-based platforms and products, Cloud based solutions and mobile app development in India. Blooming for over 10 years in the app industry, Sphinx Solutions today prides in being one of the best iOS app development companies for delivering secured iOS app solutions to clients all across the globe.   We are one stop technology solution provider. With offices ... Read more
Jump up ^ Kopfstein, Janus (12 December 2013). "The Mission to Decentralize the Internet". The New Yorker. Archived from the original on 31 December 2014. Retrieved 30 December 2014. The network's 'nodes'—users running the bitcoin software on their computers—collectively check the integrity of other nodes to ensure that no one spends the same coins twice. All transactions are published on a shared public ledger, called the 'block chain.'
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.
Jump up ^ Kopfstein, Janus (12 December 2013). "The Mission to Decentralize the Internet". The New Yorker. Archived from the original on 31 December 2014. Retrieved 30 December 2014. The network's 'nodes'—users running the bitcoin software on their computers—collectively check the integrity of other nodes to ensure that no one spends the same coins twice. All transactions are published on a shared public ledger, called the 'block chain.'

3) the argument ‘let’s harden internal IT as if it worked outside the firewall’ makes a ton of sense to me. We need to construct a lot of hoops for hackers to jump through, as permitter defense is not holding up anymore. And we need to make our systems anti-fragile. The blockchain data structure is a good tool, other P2P tools can be used too. Also, the blockchain has initiated a renaissance of crypto tech, like multisig, payment channels., HD wallets, hot-cold storage, and other innovations in key management.
The consensus mechanism is centralized in the hands of a single entity which mission is to verify and add all transactions to the blockchain. A network based on a private blockchain, therefore does not need to use a mechanism such as “Proof of Work” or “Proof of Stake” which are complicated to implement and expensive. The problems of security being much more simple in the case of private blockchains, it is possible to apply the mechanisms of consensus lighter, more effective and therefore easy to deploy such that the BFT.
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.
In this article, I will intent to do a public vs private (permissioned) blockchain comparison. This will include an examination of what exactly the roles of these two types of blockchain really are and why big businesses should quickly move to adopt them. This analysis will look at why private blockchains are better suited to big business use when compared to public ones.

Instead of adding new features directly to the bitcoin blockchain, sidechains allow developers to attach new features to a separate chain. Since the chains are still attached to the bitcoin blockchain, the features can take advantage of the cryptocurrency's network effects and test those applications, without harming the main network should vulnerabilities arise.
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.
The information on every public blockchain is subsequently replicated to sometimes thousands of nodes on the network. No one power administers it centrally, hence, hackers can’t destroy the network by crippling one central server. Read this article “What is Blockchain technology? A step-by-step Guide For Beginners”, for a more detailed description of the technology.
“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….
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