Published on: 2020-01-18T08:21:36+00:00
In this discussion, the concept of sidechains and their relation to altcoins and Bitcoin is explored. Sidechains are described as issuing their own coins but not being independent altcoins, as Bitcoin remains the unit of account. The security of sidechains is compared to Proof of Work (PoW) and bitcoin-backed Proof of Stake (PoS), with the author suggesting that they offer the same level of security assuming equal rewards. It is noted that the real-world value of total block rewards for an altcoin must match that of Bitcoin to approach its level of security. Additionally, sidechains require a sufficient user base despite not needing to be as secure as Bitcoin in theory.The author argues against the notion that halting a healthy chain with a tiny investment is possible, stating that the invested time value per block of all honest stakeholders converges against the block reward. The security of bitcoin-backed PoS is deemed as strong as PoW because their security is proportional to the dollar value of their block reward. However, for a sidechain to be as secure as Bitcoin, it requires more users or higher fees. If the consumed resource does not match what is consumed under PoW, the sidechain is not much better than a low-PoW altcoin and can be easily attacked unless centralized around developers.A proposed bitcoin-backed PoS sidechain protocol by Robin Linus is mentioned, which utilizes one-time signatures and bitcoin-backed proof-of-burn to address the double-spending problem. Concerns are raised by Joachim Strömbergson about the introduction of new tokens for each sidechain and the fragility of the proposed system's security. Robin Linus responds by explaining the convergence of honest stakeholders' invested time value per block against the block reward, making halting a healthy chain costly. The debate between Lightning Network and sidechains is discussed, with the advantages of using independent sidechains for global scalability highlighted. Various off-chain updateable cryptocurrency systems are also mentioned as potential alternatives to sidechains.ZmnSCPxj discusses scalability issues in the blockchain space and proposes proof-of-burn (PoB) as a secure mechanism for sidechains. The importance of liquidity for atomic swaps to pay Lightning Network invoices denominated in BTC is emphasized. The idea of pegging sidecoins to BTC is considered essential for network effects. A project combining mainchain-staking with 2-way pegs to increase security in federated sidechains is outlined, although the preference for Lightning Network over sidechains is expressed.An email thread between Robin Linus and Joachim Strömbergson reveals differing opinions on Linus's proposal for a Bitcoin sidechain. Strömbergson argues against the introduction of new tokens for sidechains and questions the security of PoS sidechains. Linus defends the proposal by asserting the impossibility of double-spending and the stronger security enforced by stakeholders having to stake per chain. The disagreement continues regarding the viability of different sidechain models.In another email exchange, Robin Linus proposes a solution for Bitcoin's scalability issue using Bitcoin-backed PoS sidechains. The Coins protocol is introduced, which aims to solve the double-spending problem through one-time signatures and collateral destruction for conflicting histories. Concerns are raised about the introduction of new tokens and the security of the proposed system, with disagreements over the potential benefits of the proposal.The conversation between ZmnSCPxj and Robin focuses on the scalability and security of Bitcoin and potential solutions. The use of bitcoin-backed PoS sidechains is suggested as a solution that offers better security and public auditability while meeting the requirements of average users. Concerns are raised about the fragmentation of the community within a sidechain and the efficient use of resources.The security, integrity, and censorship-resistance of Bitcoin are discussed, with the reliance on sophisticated actors who run full nodes and provide hash power highlighted. Bitcoin-backed PoS sidechains are suggested as a solution that offers better security and simplicity for end-users compared to the Lightning Network. The limitations of custodial solutions and the need for scalability are addressed.In summary, the discussion explores various aspects of sidechains, including their relation to altcoins and Bitcoin, their security compared to PoW and bitcoin-backed PoS, and the requirements for their security and user base. Proposed solutions, such as Robin Linus's bitcoin-backed PoS sidechain protocol and ZmnSCPxj's proof-of-burn mechanism, are discussed along with concerns and debates surrounding them. The advantages of sidechains over the Lightning Network, scalability issues, and the importance of security and decentralization are also explored.The author of the message discusses the advantages of using independent sidechains for scalability in the context of the Lightning Network (LN). By utilizing sidechains, end users can "live" in these separate chains instead of directly on the LN, which offers benefits such as not requiring bitcoin blockspace for new user onboarding and eliminating the need to lock funds for inbound capacity.
Updated on: 2023-08-02T01:47:11.745762+00:00