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What is a sidechain in Blockchain?


The sidechain or side chain is an alternative blockchain, whose main function is to improve communication for the benefits of an existing blockchain. The sidechain’s main objective is to expand the specifications and characteristics of the original blockchain.

How does the sidechain work?

Its operation is not at all simple; rather, it is a huge challenge, technically speaking. Its development has required many years of dedication so that it can offer utilitarian functionality to facilitate the use of blockchain.

These side block chains are connected to an existing blockchain to interact with it. The sidechain, although it has a particular programming and characteristics, different from the blockchain to which it joins, can achieve two-way communication by complementing the capabilities of the existing blockchain itself.

In this sense, cryptocurrencies can be sent to a specific address and in that direction the funds are frozen so that nobody can move them. So to use the funds it is necessary to show that the cryptocurrencies have not been used elsewhere. So a notification is sent to the sidechain and it will automatically create the exact amount of cryptocurrencies received using the sidechain token.

It is clear that the control of those tokens is totally yours and you can exchange them, or move taking advantage of the potential of the side chain, following the protocol established in the sidechain. The testing possibilities of a sidechain is virtually unlimited.

Sidechain and Bitcoin

Another important property of the sidechain, is that if for example you want to develop a DApp and deploy it on a Bitcoin sidechain, it would be easier than trying to do it directly on the primary chain. With the side chain this function will be done in a simpler way, this could deploy the DApps and interact bidirectionally with Bitcoin. Taking advantage of the potential of Bitcoin from the sidechain.

Bitcoin has a huge blockchain, which makes its transactions slow and although 10 minutes for each block confirmation seems short time, for many users they can be eternal. In addition, the Bitcoin blockchain does not allow communication with other block chains, which translates into limitations that could be solved thanks to the implementation of sidechains. Its design also prevents changes and corrections.

Current projects that use side chains

In 2016 the arduous development work of the side chains began and the fruits obtained are already known. There are already functional projects with sidechain technology where you can see the full potential of this technology. We can mention for example:

  • Liquid Network: It is a project created by Blockstream one of the largest cryptocurrency companies in the world. This side chain was born with the purpose of working with Bitcoin and its objective, to speed up transactions with Bitcoin among the users of its platform. Liquid has its own cryptoactive known as Liquid Bitcoin (L-BTC) with 1 to 1 backup with Bitcoin.
  • RSK: This side chain was designed to give Bitcoin the ability to execute and generate complex smart contracts, expanding the functions of Bitcoin. It benefits from merged Bitcoin mining, offering better security features to the network.
  • LISK: a sidechain for developers to develop in Javascript DApps. It has its own tokens, in addition to offering the possibility to develop other side chains to use with other blockchain that need to be enhanced to generate DApps. But the really interesting thing about this sidechain is its high scalability, provided by its dPoS protocol that gives it great speed. Together with this great flexibility and potential, this sidechain is one of the best known platforms for developers.
Sidechain - Blockchain

Sidechain security

They generally use the same security and consensus protocol as the blockchain they will join to extend their functionality. Others, on the other hand, use their own consensus protocol and their own security measures. Although everything depends on how they are implemented, but in any case security is guaranteed.

Importance of sidechains

The importance of the side chains is the ability to strengthen the blockchain to which it joins to boost its operation. So if the sidechain can enable the transfer of cryptocurrencies, such as Bitcoin, to other blockchain it will have great relevance for that blockchain and its users. Thus, using a sidechain we can send BTC and turn them into a token to be sent to the Ethereum blockchain.

Another of the benefits they offer is the increase in security, preventing the occurrence of problems such as that happened to some altcoins projects. They can also provide a blockchain with new features if it alters its protocol.

They can also serve to reduce volatility and market fragmentation, increase security, avoid fraud and even theoretically solve Bitcoin’s liquidity problems. Substantially improving the current crypto ecosystem, opening new doors for new uses.

Sidechains offer the technology to develop new utilities to boost existing blockchain. At the same time they remain independent of the blockchain allowing them to experience new functionalities without risk for the blockchain for which it was created. As new transaction designs, economic models of asset issuance and new cryptographic functionalities.

Sidechain Advantages

  • Flexibility: They are designed to improve transactions between cryptocurrencies offering a user greater freedom to operate in the ecosystem.
  • Experimentation: In them you can test central software updates or any blockchain and observe its behavior without risk to the blockchain.
  • Federations: defines the state of the cryptocurrencies used in the sidechain and determine if they are available to be accessed or transferred. In addition, the creators of these are free to choose participants for the federation.
  • Decentralized web: Thanks to the side chains you can create DApps that offer cryptocurrency holders to use their assets at their discretion with the trust and protection of trust decentralization.

Sidechain Disadvantages

Just like the primary blockchains, the sidechains need the miners and their work to be safe from pirate attacks. These can only damage the side chain if they do not have enough power, but the main blockchain will remain intact. In the case that it is the main chain that receives the attack, the sidechain will keep working and without risk.

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Creative editor and trader of cryptocurrencies, fiat currencies and commodities.

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