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What Are Sidechains? How do Sidechains Work?

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Sidechains in crypto-currency space are not a new concept. The idea first appeared in 2014 when an academic paper introducing Pegged Sidechains published a number of important figures in cryptography and early digital currency growth.

A sidechain is a different blockchain that secures the transportation and use of tokens and other digital assets from one blockchain to a separate blockchain, which is then connected back to the original blockchain if required. The primary blockchain network is not affected by this process in terms of speed and performance, since the sidechain operates independently of it.

The side chains were created exclusively to improve certain features of the blockchain and are defined for a specific use case. There may be several sidechains which have different tasks distributed accordingly to improve the effectiveness of the treatment. Other applications could include optimization for higher speeds and for larger calculations. Either way, side chains can be used to control the use of commercial block chains.

How Do Sidechains Work?

A sidechain is an independent ledger connected through a two-way peg to its parent (main) blockchain. The two-way peg allows for exchange of digital assets between them at a programmed pace between the main blockchain and the sidechain. Usually referred to as the’ main chain’ is the primary blockchain, and all connected blockchains are called’ side chains.’

When someone from the parent chain wants to transfer their assets to a sidechain, they must first transfer their coins to an output address, where the coins are locked so that the user can not spend them anywhere else.

Once the transaction is complete, a confirmation is shared between the chains, followed by a waiting period for added security. After the waiting period, the corresponding number of coins is released on the sidechain, allowing the user to access and spend them. The reverse process occurs when the transfer of the side chain is carried out to the main chain.

Advantages of Sidechains

Sidechains strive to be a solution to a challenging problem–that adding new functionality to a crypto like bitcoin is a risky move as there is a chance of $230 billion if the new feature fails to work or fail.

Sidechains promote cryptocurrential interactions. They allow developers to check beta releases of Altcoins or software updates before they can be introduced onto the main chain. Traditional banking activities such as distributing and tracing shares ownership can be checked first on sidechains before transferring them to main chains. If sidechain protection mechanisms can be increasing, sidechain technology could be used to achieve a huge scalability of blockchain.

With this in mind, the side chains have not yet been implemented in the Bitcoin network, as issues such as security and centralization still need to be resolved before we can start investing our bitcoins using side chains.

Conclusion

In recent years, all of today’s blockchains have grown considerably in terms of length and storage space. As a result, some of these registers (Ethereum in particular) have struggled to cope with such huge network volumes. Side chains have the potential to extend the scalability of the system and bring many other benefits to the blockchain network. All it takes is time and other experimentation.

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