Author: Robin Linus 2020-01-13 22:22:43
Published on: 2020-01-13T22:22:43+00:00
The email exchange between Robin Linus and Joachim Strömbergson discusses the proposal of a Bitcoin sidechain protocol with no trusted third party. Robin argues that this sidechain would allow for payments at scale and proposes an efficient solution to the double-spending problem using a bitcoin-backed proof-of-stake. Validators vote on sidechain blocks with one-time signatures, forming a record that cannot be changed without destroying their collateral. Every user can become a validator by locking bitcoins. One-time signatures guarantee that validators lose their stake for publishing conflicting histories. The protocol is a generic consensus mechanism allowing for arbitrary sidechain assets. Spawning multiple, independent instances scales horizontally. Joachim, on the other hand, finds the proposal uninteresting because it introduces a new token for each sidechain and suggests atomic swaps to be used for the exchange of the mainchain token with the sidechain token. He sees excessive numbers of blockchain projects that can be used similarly as the sidechain in this proposal and believes the security of the proposed system seems very fragile unless there is an honest majority of validators. He argues that if the sidechain is put on a niche chain where only few participants are interested in it, it's trivial for an attacker to be stronger than all legitimate users together. Robin responds to Joachim's concerns and argues that the derivatives are not in competition with BTC but depend on it heavily. In his opinion, supporting such a sidechain supports Bitcoin's growth. Additionally, he suggests that they won't work as separate currencies and for end-users, all underlying complexities can be abstracted away such that they have to think only in BTC. The unit of account is still BTC. He also takes issue with the idea of creating a special wallet for atomic swaps with Litecoin and argues that it doesn't scale globally. Robin also reflects on the limitations of halting the chain and suggests burning bitcoins for every on-chain vote. Although the economic implications of burning significant amounts of Bitcoin are questionable, he argues that a level of security comparable to Bitcoin requires the system’s BTC burn rate to be equal to Bitcoin’s inflation rate. He believes that without proof of burn, such sidechains are much more secure than custodial lightning wallets which become more and more popular to circumvent the usability hurdles of the LN. In conclusion, Robin's proposal suggests a Bitcoin-backed PoS and build an LN of thousands of nameless altcoins. The security of such a bitcoin-based PoS is stronger than one might suspect, even without burning BTC.
Updated on: 2023-06-13T23:11:38.672289+00:00