Author: Erik Aronesty 2017-06-20 13:38:59
Published on: 2017-06-20T13:38:59+00:00
A proof-of-burn sidechain requires the burning of Bitcoin or side-chain tokens to mine the side chain. The size of the burn determines the degree of security. Users can have a secure sidechain that issues a mining reward in sidechain tokens, which can be aggregated and redeemed for Bitcoins. However, any Bitcoins held in the sidechain depreciate in value at a rate of X% per year, which pays for increased security. This functions like an alt coin with high inflation and cheap transactions but is pegged to Bitcoin's price due to the pool of unredeemed Bitcoins held within the side chain.Drivechain requires users to voluntarily agree to subject themselves to new rules, and miners do not have total control over the coins. Miners only control the destination of withdrawals but cannot change withdrawal-duration nor withdrawal-frequency. If miners wish to "steal" from a sidechain, they can initiate a theft, but their malfeasance will be obvious and on display for a long period of time. Before miners have control over the sidechain coins, users must voluntary agree to follow these new rules. There are three methods of security: Classic Theft, Channel Theft, and Drivechain Theft. Each method has its strengths and weaknesses, and no single method stands out as categorically worse than others.Regarding centralization, people should define it clearly before complaining about it. Bitcoin centralizes whenever the exchange rate increases or when any new user joins Bitcoin or when tx fee revenues increase for any reason. The Lightning Network also centralizes Bitcoin. Developers releasing new software grant new capability to miners, specifically the ability to deny upgrades. Blind Merged Mining addresses these issues, but it only addresses miner's interactions with each other and not their abilities as a group in relation to other groups like users, developers, investors. However, these groups of people are free to ignore any sidechains that they do not like.In a recent discussion on the bitcoin-dev mailing list, the legal theory of 'volenti non fit injuria' was discussed. The theory suggests that those who voluntarily make a choice cannot later claim to have been injured by it. This is relevant in the context of Drivechain, which limits users' choices when it comes to who acts as the custodian of their Bitcoins. Currently, no P2P sidechains exist, and so the set of options available to users may seem limited. However, this may not be the case in the future, and it is unclear why there is emphasis on 'trustworthy' exchanges, as sidechains are more like Altcoins than exchanges. The discussion raises questions about the potential impact of Drivechain on user choice and control over their Bitcoins.
Updated on: 2023-06-12T02:13:48.122305+00:00