Sidechain

A sidechain is a separate blockchain that is attached to a larger, ‘main chain’ blockchain using a two-way ‘peg.’

These are emerging mechanisms that extend to a wide range of digital assets, including cryptos, tokens, and others.

Sidechain functionality has a lot of potential to enhance the existing capabilities of blockchains.

The two-way peg facilitates interchangeability of assets at a predetermined rate between the parent blockchain and the sidechain.

In this instance, all additional blockchains are designated as sidechains.

A user on the parent chain first has to send their coins to an output address, where the coins become locked so the user is unable to spend them elsewhere.

Upon completion of the transaction, a confirmation is transmitted across the chains, as well as a waiting period for extra security protocols.

Following this period, the equivalent number of coins is released on the sidechain. This allows the user to access and spend coins there.

An inverse of this happens when moving back from a sidechain to the main chain.

Sidechains Explained

Sidechains are responsible for their own security. However, if there aren’t enough miners to uphold a sidechain network, it could easily be hacked.

Miners on a mainchain network can choose to mine coins on a sidechain network simultaneously.

A hacked sidechain won’t compromise the safety of its mainchain.

The underlying purpose of sidechains is to allow people to safely experiment with different rules, networks and consensus mechanisms.

This can be suitable for different purposes, without putting the main Bitcoin network at risk.