Sidechain Definition
A sidechain is an independent blockchain ledger that operates alongside the primary, or mainchain, blockchain. Sidechains are separate chains where digital assets from the main blockchain can be utilized, and then transferred back to the main blockchain if necessary.
Sidechain Key Points
- A sidechain operates independently from its mainchain, though they can communicate and interact with each other.
- Allows the transfer and use of digital assets from the main blockchain onto the sidechain.
- Designed to alleviate transaction processing load from the mainchain for improved scalability and efficiency.
- Allows for more flexible and innovative blockchain development with different rules and systems not present in the mainchain.
What is a Sidechain?
As the name implies, a sidechain is a type of blockchain that runs parallel to the mainchain, enabling assets to be securely used and moved between both chains. Sidechains serve as extensions of the mainchain, expanding its capabilities and offering room for innovation.
Why is a Sidechain Important?
A sidechain alleviates the processing load on the mainchain, improving scalability and preventing the mainchain from becoming overwhelmed with transactions. This helps keep transaction processing smooth and efficient on the mainchain.
Where is a Sidechain used?
Sidechains can be used in various scenarios in the crypto world. Cryptocurrencies including Ethereum and Bitcoin have utilized sidechains to process transactions more efficiently. They are also utilized in experimenting with new blockchain technologies without impacting the mainchain operations.
Who uses a Sidechain?
Developers, cryptocurrency networks, and businesses that use blockchain technology often employ sidechains. Tech companies, financial institutions, and government entities are a few examples of the myriad of users.
How does a Sidechain Work?
To use a sidechain, assets are moved from the mainchain to the sidechain via a process called “locking”. Once locked, the same amount of asset is generated on the sidechain for use. After use, these assets can be moved back to the mainchain by destroying the equivalent amount on the sidechain.
When would you use a Sidechain?
Use of a sidechain is ideal when there’s a need for more flexibility or when the mainchain is being overloaded with too many transactions. You may also use a sidechain when you want to experiment with new blockchain features without disrupting the mainchain.
