Author: Angel Leon 2020-01-16 01:21:52
Published on: 2020-01-16T01:21:52+00:00
The debate between Lightning Network and sidechains has been a topic of discussion lately. While Lightning Network works well for those who are always online, have BTC to manage their channels' inbound-capacity, and can afford BTC transactions, these conditions do not apply to the next billion users who may have unreliable cell phone connections and no BTC yet. Custodial solutions like tippin.me and BlueWallet work for small amounts but scaling them globally leads to trusting banks with their Excel sheets. To make their internal ledgers public and trustless, independent sidechains could be used. Decentralized blockchains scale decently up to a couple of million UTXOs, so a couple of thousand sidechains may suffice for a global medium of exchange. Cross-chain communication without requiring cross-chain validation is possible via atomic swaps and through Bitcoin's LN. End-users "living" in sidechains instead of directly in the LN has many advantages, including no bitcoin blockspace required for on-boarding new users, no need to lock funds to provide inbound-capacity, no need to stay online or pay watch towers, no need to store channel histories, and account balances can be much smaller than BTC TX fees.Multiparticipant offchain updateable cryptocurrency systems such as Decker-Wattenhofer or Decker-Russell-Osuntokun constructions could replace sidechains, with better trust-minimization. The Channel Factories concept does what is needed with even better trust minimization than sidechains can achieve. You can even use the Somsen "statechain" mechanism that rides a Decker-Wattenhofer/Decker-Russell-Osuntokun construction. Poon-Dryja, Decker-Wattenhofer, Decker-Russell-Osuntokun, and future such constructions can host any contract that its lower layer can support. Anything that can be put on-chain can generally also be put off-chain, so why use a chain at all except as an ultimate anchor to reality? Poon-Dryja is strictly two-participant, while Decker-Wattenhofer limits the practical number of updates due to its use of decrementing relative timelocks. It is suggested that the payment layer be put in a bunch of Poon-Dryja channels which support tons of updates each but only two participants per channel and create a layer that supports changes to the channel topology, where changes to the channel connectivity are expected to be much rarer than payments, and is multiparticipant so you can actually scale. Instead of using sidechains, just use channel factories. The entire internal ledgers of those services do not need to be broadcasted; only their customers need to know those internal ledgers and sign off on the updates of those ledgers.
Updated on: 2023-06-13T23:12:22.918741+00:00