Sidechain - An All New Blockchain Concept For 2020
Blockchain is becoming a game player in all industries, as blockchain technology be the reasons for the improvement in all industries scope and visibility. This trending technology too faces some issues over the past years. To overcome all issues of the blockchain, there emerges a new concept called sidechain, the extension of the blockchain.
Sidechains are prevailing over years in the crypto world, but it first blasted out in 2014 when many authors wrote about an academic paper introducing Pegged Sidechains.
We all have a good knowledge of Blockchain technology and its working.Isn't it ?? .. If not just look at our blog :
What is Blockchain Technology? How does it work? to get know about Blockchain technology. Here let us share something new, about sidechains and how it helps blockchain to work better.
Major Issues in Blockchain Technology :
Before knowing about the sidechains, let us first list out the major issues that exists in the blockchain.
1. Scalability :
The ability of the system to handle the growing amount of work by changing its size is known as scalability. Blockchain finds it difficult to withstand its scalability as there is a huge amount of applications of blockchains day-by-day.
2. Interoperability :
Interoperability refers to the ability of a computer software/system to operate, exchange and uses the information instantly. Blockchain suffers from interoperability issues over the years.
3. Liquidity :
The term liquidity refers to the volume of activities performed by a product/brand in the market. Liquidity of blockchain strikes to the bottom in recent days.
To know the blockchain issues in detail and solutions followed to overcome them, refer this links
Blockchain Scalling Problem Explained
The chain fork, code fork, and sidechains are the solutions for blockchain issues. But sidechain proves to the best solution out of all mentioned solutions.
Sidechain - A Greater Solution for Blockchain
All the above-mentioned issues of blockchain are overcome by this concept called sidechains. Thus, sidechains are considered to the best solutions for all the difficulties of the blockchain.The main goal of this new concept of sidechain is to validate the transaction without affecting the whole system or network.
Sidechain is nothing but a separate chain as like blockchain, connected to the main blockchain via two-way-peg. Sidechains are considered as sub-chains or child chains and the first build blockchain are considered as a main chain or parent chain.
Benefits of Sidechains
Connecting a side chain with a blockchain to overcome the scalability and interoperability issues provides a lot more benefits.
1. Helps us overcome the blocking of scale. i.e., limiting the number of transactions on the blockchain.
2. Provides flexibility of using the blockchain.
3. Increases the speed of transactions by limiting the time.
4. Proves to be cost-effective.
Sidechains are not private blockchains, Where as the private blockchain limits the access to certain people inside the distributed networks.
How to connect sidechain with the main chain?
The sidechains are connected with the main chain with the help of two-way peg, which is a decentralized method and it uses SPV or Simple Payment Verification process.
Two-way peg allows the transaction of cryptocurrency from the main chain to sidechains and also from sidechains to the main chain. This concept of sidechains is built in such a way that it supports any kind of cryptocurrency transactions.
How does sidechains works?
The assets/ cryptocurrency are not directly transferred but follow some steps. The transactions of coins or assets to sidechain works as follows. Let us assume the transaction of the asset is from the main chain to one of the sidechains.
1. First, the assets/coins are transferred to an address and locked there for some period of time.
2. When it is locked under a special address it is assigned as "unspendable" tag which shows that it is the assets that are not spent and available for transacting.
3. Then, SPV confirms the transaction of the assets.
4. After the verification process, the assets get transferred to the sidechain with a small delay in time.
The above process is the same for transferring an asset from any sidechains to the main chain. This transaction process is a decentralized way. It can also be made centralized process with the Federation sidechain system.
Federation/centralized sidechain system
The transaction process will take place as same as in the case of decentralized sidechain system but with the difference that SPV in decentralized is replaced by a group of trusted individuals or federation in a centralized system.
The assets locking in a special address and transaction verification are monitored by the federation in this kind of sidechain system.
Properties of Sidechains
The main properties of two-way -pegged sidechains are as follows :
1. The assets that are transferred to sidechains can be moved back to the main chain.
2. It allows transactions without any counterparty risks.
3. The important property of sidechains is, they are independent. ie., the hacks or affects on any sidechain will not have reflections on other sidechains or main chain and vice versa.
4. The transactions on particular sidechain are untrackable by the users who don't use/belongs that side chain.
Recent Use cases of Sidechain
The notable sidechain implementations in recent years are listed below :
1. Rootstock has created an open source testnet called Ginger for its sidechains .
2 . Ardor’s Blockchain which uses POS mechanism implements its child chains for global transactions of assets.
Future of Blockchain with Sidechains
Blockchain with its new dimension called sidechains can surely make for a better future. Developments in sidechains will go a long way in bringing better liquidity, interoperability, and scalability of the blockchain and cryptocurrency globe.
Sidechains will sound louder within few days and by 2020, there will be no blockchain present without its sidechains. Let us hope for good revolutionary changes by " Sidechains- The back-end Player of Blockchain Technology. "