Blockstream recently released a whitepaper on “strong federations,” which is essentially their vision of a federated two-way peg system. Liquid is a sidechain created by Blockstream that uses the strong federations model. The sidechain is used to transfer bitcoins between centralized bitcoin institutions, such as exchanges, at a faster pace than the public Bitcoin blockchain.
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.
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.

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.
There is a whole other issue of identity theft that needs to be addressed. Just a short note here as this is a big subject: If the private key to identity object is stolen, the true owner of the identity needs to have a way to change the key. One approach to that would be to use the private key of the bitcoin transaction that created the first version of the identity object. Another way could be to prove the ownership of other public keys on the identity object, like the one used for encryption (PGP key management suggests a separate key for each purpose, signing, encryption, etc.). Other non-automatic ways could include a trusted third-party, social proof, etc.

– The manipulation of the blockchain: It is indeed possible to come back at any time on the transactions that have already been added to the blockchain and therefore change the balance of the members. In a public blockchain, such operation would require that 51% of the hashing power (i.e capacity to mine) is concentrated in the hands of the same entity. This not theory anymore since it happened beginning 2014 when the cooperative of GHash minor reached the 51% threshold.
A blockchain is so-called “public” (or open) when anyone can become a member of the network without conditions of admission. In other words, anyone wishing to use the service proposed by the network can download the protocol locally without having to reveal his or her identity or meet predetermined criteria. A protocol is a computer program that could be compared to a Charter in that it defines the rules of operation of a network based on a blockchain. For example, the members of the bitcoin network download the Bitcoin protocol (through the intermediary of their “wallet”) to be able to join the network and exchange bitcoins, but the only condition is to have an Internet connection.
Security: RSK´s blockchain is secured by merge-mining, which means that they can achieve the same security as Bitcoin in terms of double-spend prevention and settlement finality. The 2way peg security will first rely in a federation holding custody of bitcoins, and later switch to an automatic peg, when the community accepts the security trade-offs of the automatic peg.

Sidechains solve a lot of problems, but at what cost? The introduction of sidechains makes things even more complex and much harder to understand for those who are not actively involved in the blockchain space. This also divides assets, no more “one chain, one asset” adage, which further complicates things. And on a network level there are multiple independent unsynchronised blockchains interacting with each other.


A blockchain is a continuously growing list of records called blocks, these blocks are linked and secured using cryptographic algorithms. Each block typically contains a hash (a link to a previous block), a timestamp as well as transaction data. Full nodes validate all the transactions, but are unable to settle the disagreements in regards to the order in which they were received. To prevent double-spending, the entire network needs to reach global consensus on the transaction order. It achieves this by using centralised parties or a decentralised proof of work or proof of stake algorithm (and its derivatives).
It may sound nitpicky, but I think that description leaves something to be desired in terms of presenting the “correct” mental model. First, there is no such thing as “a” bitcoin, as I am sure the author would agree. Speaking of spending or moving bitcoins perpetuates the notion of bitcoins as “things”. It might be preferable to say that you are spending or moving “units of the bitcoin protocol”. There is something similar going on here with dollars. The dollars in your bank account aren’t things either, they are units of demand or claim on a currency. The fact that printed dollars have serial numbers tends to confuse this notion. Treating something as a “thing’ which is not a thing is sometimes referred to as the reification fallacy.
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.
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.
Tú, o el usuario en cuestión de las sidechains, envía los bitcoins a una dirección Bitcoin específica, sabiendo que, una vez mandados, estarán fuera de tu control y fuera del control de cualquier otra persona. Estarán completamente inmovilizados y sólo se podrán desbloquear si alguien puede demostrar que no se están utilizando en ningún otro lugar.
Let me explain. The Lightning Network allows for the creation of “micropayment channels” across which multiple Bitcoin transactions can be securely performed without interacting with the blockchain, except for the initial transaction that initiates the channel. There is no counterparty risk: if any party ceases to cooperate, and/or does not respond within an agreed-on time limit, the channel can be closed and all its outstanding transactions kicked up to the blockchain to be settled there.
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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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 first work on a cryptographically secured chain of blocks was described in 1991 by Stuart Haber and W. Scott Stornetta.[10][6] They wanted to implement a system where documents' timestamps could not be tampered with or backdated. In 1992, Bayer, Haber and Stornetta incorporated Merkle trees to the design, which improved its efficiency by allowing several documents to be collected into one block.[6][11]

The great thing about Bitcoin, for a tech columnist like me, is that it’s simultaneously over-the-top cinematic and technically dense. Richard Branson recently hosted a “Blockchain Summit” at his private Caribbean island. There’s a Bitcoin Jet. At the same time, 2015 has seen the release of a whole slew of technically gnarly–and technically fascinating–proposals built atop the Bitcoin blockchain.
Function Transactions executed between the locks and unlocks of the main chain tokens don't bloat the main chain. As the technology of a side chain is connected to its main chain, it can be used to build on the developments of the main chain and introduce new features to the market. Child chains serve as the transactional chains of the parent-child architecture, as the parent chain retains minimal features.
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The distributed Bitcoin mining network performs quadrillions of calculations every second that maintain the integrity of its blockchain. Other blockchains aren’t remotely as secure, but they innovate much faster. Sidechains, an innovation proposed and developed by the startup Blockstream, allow for the best of both worlds; the creation of new blockchains “pegged” to Bitcoin, so that value can be transferred between them, which can conceivably be automatically secured by Bitcoin miners via “merged mining.”
New distribution methods are available for the insurance industry such as peer-to-peer insurance, parametric insurance and microinsurance following the adoption of blockchain.[71][72] The sharing economy and IoT are also set to benefit from blockchains because they involve many collaborating peers.[73] Online voting is another application of the blockchain.[74][75]

The idea emerged that the Bitcoin blockchain could be in fact used for any kind of value transaction or any kind of agreement such as P2P insurance, P2P energy trading, P2P ride sharing, etc. Colored Coins and Mastercoin tried to solve that problem based on the Bitcoin Blockchain Protocol. The Ethereum project decided to create their own blockchain, with very different properties than Bitcoin, decoupling the smart contract layer from the core blockchain protocol, offering a radical new way to create online markets and programmable transactions known as Smart Contracts.


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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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Unfortunately our second option cannot be done yet, because to use these sidechains, main chain (here it is bitcoin) needs to do some upgrade (soft fork). By the way, upgrades in public blockchains are very painful yet. There will be a user activated soft fork (UASF) on August 1. All bitcoin forms’ trend topic is this soft fork which is about a code change for Segregated Witness Adoption.
Implemented by The initial design was published by Blockstream in 2014, but the implementation is blocked by the lack of native support for SPV proofs in Bitcoin (which may not be added at all). Rootstock workaround this by sacrificing decentralization (still work in progress). The Ardor platform created by Jelurida is the first to propose and implement the concept of Child Chains. Already running on testnet, the production Ardor launch is scheduled for Q4 2017.
A public blockchain is ideal when the network must be truly decentralized, which means that no central entity controls the entry of the members on the network and the consensus mechanism is democratic. A democratic mechanism of consensus means that all members can become a minor and that these miners are in competition to add the blocks to the blockchain (at least when the mechanism of the evidence of the work is used).
Anyway, new blocks do not appear on the blockchain all of a sudden – the network must achieve consensus. In other words, each transaction must be validated by the rest of the network members, so-called “nodes.” Their contribution to the final decision on consensus is equal. Each node solves a complex cryptographic problem, and when a solution is found a new block appears on the blockchain. Such algorithm is called “proof-of-work consensus protocol.”

Function Transactions executed between the locks and unlocks of the main chain tokens don't bloat the main chain. As the technology of a side chain is connected to its main chain, it can be used to build on the developments of the main chain and introduce new features to the market. Child chains serve as the transactional chains of the parent-child architecture, as the parent chain retains minimal features.


It may sound nitpicky, but I think that description leaves something to be desired in terms of presenting the “correct” mental model. First, there is no such thing as “a” bitcoin, as I am sure the author would agree. Speaking of spending or moving bitcoins perpetuates the notion of bitcoins as “things”. It might be preferable to say that you are spending or moving “units of the bitcoin protocol”. There is something similar going on here with dollars. The dollars in your bank account aren’t things either, they are units of demand or claim on a currency. The fact that printed dollars have serial numbers tends to confuse this notion. Treating something as a “thing’ which is not a thing is sometimes referred to as the reification fallacy.
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A private blockchain network requires an invitation and must be validated by either the network starter or by a set of rules put in place by the network starter. Businesses who set up a private blockchain, will generally set up a permissioned network. This places restrictions on who is allowed to participate in the network, and only in certain transactions. Participants need to obtain an invitation or permission to join. The access control mechanism could vary: existing participants could decide future entrants; a regulatory authority could issue licenses for participation; or a consortium could make the decisions instead. Once an entity has joined the network, it will play a role in maintaining the blockchain in a decentralized manner.
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