Bitcoin Blockchain Innovations: Sidechains

Bitcoin sidechains

Sidechain is a very significant innovation for electronic money. This very innovation become more popular and has a positive effect on the development of crypto currency in the world. We decided explain what sidechains are and what benefits exactly they have for electronic money.

However, sidechains have been already known for being a trustful aspect in digital money, it is more demanding now than ever. It provided people a chance to try such a group as Blockstream. By creating sidechains it is possible for Bitcoin to make clever contracts without losing the currency.

Briefly, a sidechain is a blockchain that is connected to a initial object though two-side peg. This peg allows changing assests. Also, it allows moving forward by a chain with a fixed exchange rate. This two-side connection works by uing a simple check of payments. This also can be called SVP. It allows to demonstrate and prove the pocession of holdings an the innitial chain.

For example, Rootstock needs to send coins toa certain output address in order to move assets from one of the cains to another. Those coins then will be blocked and will not be used anymore. Once the payment is completed, SVP will confirm it. This is only a secondary method to avoid double spendigns. The equivavelent money will be added and spent on a sidechain.

At the moment, Rootstock Litecoin can be used for creating smart contracts as we have already mentioned above. Sidechains na excist in all types of digital assests with the possibility to have more freedom ti experiment with beta version of core software and Altcoins. Also the digital assests can accept traditional babking tools such as keeping track of holdings, bonds, and shares.

Like any other blockchain, sidechain needs own mine-workers to protect them from bad customers and possible attacks that are ofter can be used against the network. Sidechain can not be called rich, therefore, to protect the network seems a tough task. Therefore, payment commisions are the only reliable sources that are given to mine-workers. Ufortunately, even pyment commisions do not have a real value and are called pennies comparing to what the network earns every single day.

If you are interested in creating a safe sidechain, you must consider stimulation of mine-workers in other ways. Maybe a good idea can be to attract investors who can pay mine-workers. The possibility to get a large mining award will make mine-workers work better than ever. The mine-workers will be intersted to continue mining because they will be paid later but not at the time when sidechain can release its own award for already excisting payments which means sidechain will simply become Altcoin.

However, the ideo to make a two-side connection is not that perfect as it may seem. Teoretically, SVP can ve fooled by a big number of coins that it was put at first. If the attack will them move these coins to the initial part, it would take coins from the customer to fund the instability. To make sidechains completely safe it will require to upgrade the wallet to allow both chains to check transfers.

Anyway, sidechains do an important progress in helping to create a digital financial ecosystem. Probably, new upcoming technical innovations will have a positive influence on digital money system.