Category Archives: sidechains

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Bitcoin Drivechain Launched, Enables Sidechains, Scalability

Bitcoin Drivechain has been officially released as of 24 September 2018, after about three years of being developed. Drivechain enables Bitcoin sidechains, which can be useful for building decentralized applications (Dapps) and exploring new Bitcoin technology. They also act as a scalability solution for Bitcoin.

The primary purpose of the Bitcoin Drivechain is to provide the framework to build Bitcoin sidechains. The sidechains will be intimately linked with the main Bitcoin blockchain, and users will be able to exchange Bitcoin for the sidechain versions of Bitcoin via a two-way peg. A user will lock up normal Bitcoins with a smart contract, and then receive the sidechain version of Bitcoin that they choose. They can convert this sidechain back to regular Bitcoin at a later time, or use atomic swaps to trade sidechain Bitcoin for regular Bitcoins at different exchange rates.

Developers will be able to use Drivechain to launch modified versions of Bitcoin. This circumvents the often arduous and controversial process associated with modifying Bitcoin’s code. If a developer wants to change an aspect of Bitcoin they can simply launch a sidechain. This is expected to accelerate the advancement of Bitcoin technology. Additionally, since Bitcoin will be intimately linked to the sidechains, Bitcoin’s price could go up on increased utility.

Some ideas proposed for Drivechain sidechains are databases, financial marketplaces, coin mixing, casinos, a Bitcoin Domain Name Server (DNS) system, integration with traditional banking systems like SWIFT, and a proof of stake (PoS) version of Bitcoin. Perhaps the most interesting use of sidechains is the development of outside-the-box new technology that can make Bitcoin more efficient, more secure, and generally higher tech.

Clearly, Drivechain will allow Dapps to be built on top of Bitcoin, in the same way Dapps are built on Ethereum. It might be more desirable for these to be built with a platform directly linked to Bitcoin’s blockchain, and this could be a serious competitor for Ethereum.

That being said, sidechains built with Drivechain have their own blockchains, and their blockchains are secured with proof of work (PoW). Bitcoin’s mining hash rate will not go towards securing the sidechains, and transactions will not take up space in Bitcoin blocks. Further, the presence of multiple sidechains that can be used to transact money will likely divert transaction volume away from the Bitcoin main chain, increasing the space available in Bitcoin blocks.

 

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10% of Bitcoin Miners Merge-Mine RSK Smart Contract Sidechain

Rootstock (RSK), the first Bitcoin smart contract sidechain, has announced that 10% of all Bitcoin miners are now securing the RSK blockchain. This makes RSK extremely secure since that is a tremendous amount of hashing power.

Smart contracts are a major advancement in the cryptocurrency and blockchain technology world. They allow users to enter into conditional agreements and lock up a certain amount of cryptocurrency until conditions are met. This provides the building blocks for the development of decentralized applications that are directly integrated with the blockchain.

Ethereum has consistently been the second most popular cryptocurrency behind Bitcoin and currently has a market cap of over USD 70 billion. The reason for its popularity is that it has smart contract technology integrated into its protocol, used by many blockchain-based applications.

It is not possible to directly add smart contracts to the Bitcoin blockchain without controversial protocol changes. RSK founders found a solution in creating a sidechain which supports smart contracts and is directly linked to the Bitcoin blockchain.

RSK has its own native cryptocurrency called Smart Bitcoins, but they are directly pegged to real Bitcoins. When a user deposits Bitcoin for an RSK smart contract it remains on the Bitcoin blockchain and is locked up for the duration of the contract, and an equivalent amount of Smart Bitcoins on the RSK sidechain are put into the smart contract. This is done so that RSK smart contracts truly are Bitcoin-based, rather than using their own independent cryptocurrency which would compete with Bitcoin.

Currently, the RSK sidechain can handle 100 transactions per second, with block confirmation times of 10 seconds, but it soon hopes to release a version of RSK called Lumino that has Lightning Network technology and can handle 20,000 transactions per second.

The RSK sidechain can be merged-mined with Bitcoin, meaning that machines mining Bitcoin don’t have to use any additional power or resources to participate in securing and maintaining the RSK network. Miners are rewarded with transaction fees from the RSK network, so it is logical and profitable that every single Bitcoin miner would merge-mine RSK to get extra money. Due to this, the developers of RSK expect much more hashing power to join its network in the long term.

RSK is fully operational and can be used to build decentralized apps that use Bitcoin and directly interact with the Bitcoin blockchain. This gives Bitcoin capabilities similar to Ethereum and will help make Bitcoin use more widespread.

 

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