Overview Of Bitcoin Sidechain Tradeoffs – Bitcoin Magazine

This is an opinion editorial by Shinobi, a self-taught educator in the Bitcoin space and tech-oriented Bitcoin podcast host.

This article is the last in a series diving into the major sidechain designs that exist for Bitcoin. It is highly recommended to read the preceding pieces before this: (1) Spacechains, (2) Spacechain Use Cases, (3) Softchains, (4) Drivechains, (5) Federated Chains.

What are sidechains in a nutshell? Blockchains that allow you to move your bitcoin from the Bitcoin blockchain to this other sidechain. Therein lies the issue and the difficulty with designing a sidechain — you can’t actually do that. You can’t move bitcoin from the Bitcoin blockchain to another blockchain; that’s not possible because the only place your bitcoin actually exists is on the Bitcoin blockchain. They can’t actually exist anywhere else. All that is really possible to do is to lock your bitcoin in some way on the Bitcoin blockchain and then create other tokens on a different chain to represent those bitcoin. The highest aspiration of a sidechain is to do so in a way where it is verifiable that these tokens only exist 1:1 with real bitcoin (easy), and where the only way to unlock bitcoin on the mainchain in any situation is to verifiably lock tokens you legitimately control on the other chain (very hard to do in a trustless way that doesn’t make bitcoin itself more expensive to verify).