Sidechains Definition
A sidechain is a separate blockchain that is attached to its parent blockchain via a two-way peg. It allows tokens from one blockchain to be securely utilized within a completely different blockchain and then moved back if necessary.
Sidechains Key Points
- A sidechain refers to any blockchain protocol that exists adjacent to a primary blockchain, running in parallel.
- They’re independent, so if they crash or are hacked, the damage can’t spill over into the main chain.
- Sidechains allow the possibility of quicker and lower cost on-chain transactions.
- Sidechains can operate under different consensus models, providing more flexibility
What are Sidechains?
Essentially, sidechains are secondary blockchains attached to the ‘main’ blockchain. They offer more throughput and processing capacity for a network by allowing transactions off the main chain. This can be particularly useful for applications that require higher transaction speeds or capacity than the main chain can provide.
Why are Sidechains important?
Sidechains are important because they resolve the issues of scalability and extensibility that are common with some blockchains. In addition, they provide a means of testing new protocols or smart contracts before they are implemented on the main chain, and they enable the reinforcement of functionality without tampering with the main chain.
Where are Sidechains used?
Sidechains are employed primarily in blockchain based applications, where a main chain may not have the capacity to process all transactions. For example, Bitcoin has adopted the Liquid Network sidechain to allow faster transactions among some businesses and individuals.
Who uses Sidechains?
A wide variety of parties use sidechains – from individual traders and small businesses to large corporations. It’s particularly prevalent amongst tech-savvy users who are looking to optimize the efficiency of their transactions or experiment with new transaction types.
How do Sidechains work?
Sidechains work by creating a separate, parallel blockchain to the main chain, upon which transactions can take place. When transactions occur on the sidechain, those transactions do not take up space on the main chain, thus increasing the overall speed and efficiency of the network. Tokens from the main chain can be transferred to the sidechain, and vice versa, providing seamless interoperability and flexibility.
