This approach isn’t fool-proof, but it’s not by mistake that the system looks the way it does today (that’s my history degree talking). Despite best technical efforts, human problems remain within the realm of probability. From http://www.nytimes.com/2009/01/15/books/15masl.html: “…blame cannot be easily assigned: not even the most sophisticated economists of the era could accurately predict disaster, let alone guard against it. The effects of a public herd mentality at the time of the [insert catastrophe here] are depicted, all too recognizably, as unstoppable.”
Many blockchain enthusiasts believe in the value of networks that are not only decentralized — which most closely resembles the current model of the Internet — but distributed. This includes Tim Berners-Lee, who founded the World Wide Web in 1989. Berners-Lee has proposed that blockchains can be used to reinvent the web in a more distributed and peer-to-peer fashion.
In the context of the two-way peg, the DMMS is represented by the Simplified Payment Verification Proof (SPV Proof), which is a DMMS confirming that a specific action on a PoW blockchain occurred. The SPV Proof functions as the proof of possession in the initial parent chain for its secure transfer to a sidechain. Symmetric two-way pegs are the primary type of two-way peg so we will only be referring specifically to the symmetric (compared to asymmetric) peg in this piece.
First, clear your head of anything related to money, currency or payments. And clear your head of the word ledger, too. The mind-bending secret of Bitcoin is that there actually isn’t a ledger! The only data structures that matter are transactions and blocks of transactions. And it’s important to get this clear in your head if sidechains are going to make sense.
Blockchains that are private or permissioned work similarly to public blockchains but with access controls that restrict those that can join the network, meaning it operates like a centralised database system of today that limits access to certain users. Private Blockchains have one or multiple entities that control the network, leading to the reliance on third-parties to transact. A well-known example would be Hyperledger.
It is different with a private blockchain (or closed) since the members of the network are selected before being able to download the protocol and therefore use the proposed service by the network. The mining capabilities and the system of consensus as a whole are centralized within the hands of the same entity. A network based on a private blockchain is therefore not decentralized in itself.
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: