Con-peg sidechain model

Summary:

MoonShadow, a non-programmer, posted a proposal on bitcointalk.org and slack bitcoinunlimited named Con-Peg Sidechain Model. He believes he has come up with a way to make a sidechain work without new modifications to the running Bitcoin protocol. The proposal is called the Confederation-Peg model. MoonShadow suggests that a confederation of large corporations could benefit from processing a large number of Bitcoin transactions for net zero or near zero transaction fees. In order to add BTC to this sidechain, a main chain Bitcoiner would have to send funds to one of the sponsors, after acquiring their agreement to issue sidechain coins using a special sidechain coinbase transaction. The model requires more trust than the trustless model of the main blockchain but permits the sidechain to structure itself in any way necessary to permit safe referencing of unconfirmed transactions, thereby permitting nearly instant follow-up transactions. Paid-for transaction fees could be based upon whatever the sponsors agree to, including a transaction fee based upon a percentage of the transfer value instead of the byte-size of a transaction. This would make the fee model much closer to how current-day credit card transfer fees work, but would almost certainly be less. MoonShadow believes that "clients" choose whether the lower transaction costs & convenience at these institutions are worth the re-addition of trust to some portion of their Bitcoin activities. This low-trust model depends upon the idea that the sponsors don't entirely trust one another, and will keep an eye on each other for bad behavior. Many people have complained that Bitcoin isn't anonymous, because the entire transaction history is visible. Sidechains would fix that immediately, even without improved anonymity rules.

Updated on: 2023-06-12T22:12:28.048996+00:00