At last… there is a sensible solution proposed which should allow bitcoin to survive and thrive in the future.
There is a new paper (22 October 2014) which revisits the concept of side chains and takes it to the new level. The idea of sidechains is not new, however, the problem is, was it ever taken seriously? Now it seems suddenly to gather enough support from core bitcoin developers and bitcoin foundation. This changes everything in my opinion.
The brilliant solution is … to move bitcoins out of the bitcoin blockchain to a sidechain, in such a way that they can be moved back later. A complete separation between bitcoins (redeemable units of account) and the bitcoin blockchain (bitcoins could live on another blockchain).
Why this is such a great idea?
- One reason to switch to a different blockchain could be that current bitcoin is so terribly slow, this even though it would be relatively easy to fix it.
- Or that bitcoin scripting language is not Turing-complete (cf. Ethereum).
- Or that bitcoin is not very anonymous.
- Multiple blockchains partly solves the problem of the growing blockchain size.
- However in our opinion the most exciting idea about the sidechains is that they will be isolated distinct security domains.
So IF there is a “cryptographic break (or malicious design)” which is clearly one of the main motivations to introduce side-chains in the abstract of the paper , at least bitcoins in another bitcoin blockchain can still survive. The same in case of some form of 51% attack in one blockchain, which is another hugely underestimated risk and threat today.
Sidechains are expected to make bitcoin much more robust against attacks than ever before. Well, only and at least for a fraction of bitcoins stored in a well-chosen places. However at least developers who want to make bitcoins more secure than now, will be allowed to do so!
Sidechains should also allow for more advanced cryptography to enter bitcoin space, therefore this paper is probably simply the most significant paper about bitcoin since Satoshi.
Let The Better SideChain Win
The paper also anticipates that one of the new freshly created bitcoin blockchains may soon become MORE popular that the current bitcoin blockchain. For example it is easy to imagine that 90% of people will move ALL their bitcoins to another blockchain, just because these new blockchains will be faster, offer additional functionality, etc.
This also applies to security. Quite strangely the authors of the paper do hypothesise that it would be one of the newly created sidechains which would be weak,or some sort of dangerous experiment with the security of our bitcoins. In reality the opposite could be argued. Maybe bitcoin will be systematically more dangerous.
Developers of sidechains can get a lot of help:
- they can benefit from all the positive experience of current bitcoin developers, import their existing source code, and making it better.
- unlike with many altcoins which had serious problems in the past, with merged mining it is not necessarily true that these blockchains will be any more vulnerable to 51% attacks than now,
- sidechains could be developed easily on the top of any more advanced platform such as Ethereum which could already (or later) offer vastly superior security and cryptography, for example because Ethereum employs two very good academic cryptography expert advisers.
For now it was the current bitcoin which was notorious for playing with the fire:
- deliberately ignoring or dismissing major security risks in public,
- failing to consider that security and cryptography in bitcoin need more attention and that yes, there are some minimum professional standards in crypto community,
- not applying important security upgrades already implemented 18 months ago or so,
- failing to take notice that no single expert would recommend this elliptic curve to be used ever,
- in general, avoiding to adopt more robust proactive philosophy and upgrade the cryptography before there is a serious problem,
- keeping bitcoin in a state of under-development and allowing the peer network to decline,
- allowing bitcoin to become excessively centralized,
So possibly, new sidechains can be systematically better and more secure than bitcoin! At the end of the day, a lot of people will be tempted to move their bitcoins to some fancy new blockchains.
Of course there is also a possibility that some whole new sidechains will be developed with a criminal intention from the start… Well, not a new risk, we already have this problem: current bitcoin has an anonymous author and a dodgy elliptic curve, and there is already plethora of other open source currencies some of which are rather problematic.
Conclusion: Better Prospects for Bitcoin
All this should have huge consequences and overall my conclusion is very positive.
Sidechains are the best thing which could happen to bitcoin ever. It takes bitcoin to a new dimension.
Sidechains should allow a lot more innovation and security inside bitcoin, not outside bitcoin as it was in the past few years. Inevitably, on the fundamental side, IF such bi-directional transfers are allowed by the current bitcoin software, as this is not guaranteed to happen yet, this should increase the value proposition of bitcoin, as a system, network, brand, place to put savings in etc.
It should also bring more peace to the bitcoin community: remove most of the exacerbated competition and rivalry between between bitcoin and different alt-coins, and between different technology solutions. For example maybe very soon there will be bitcoins living on the DogeCoin blockchain which will be spent running some fancy scripts with advanced cryptography which were initially meant to run on Ethereum.