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But after that soft fork, most subsequent blockchain innovation and experimentation will probably happen on sidechains It's far from clear that will in fact ha

But after that soft fork, most subsequent blockchain innovation and experimentation will probably happen on sidechains It's far from clear that will in fact happen - mined sidechains that aren't widely adopted by miners are insecure, just like small altcoins are vulnerable to 51% attacks. Even worse the 2-way-peg mechanism Blockstream proposes trusts hashing power to determine where coins go so an attacker not only destroys the sidechain, but has a direct financial incentive to do so because destroying the sidechain lets them steal all the money that has been moved to it. Equally even if a majority of miners support a given sidechain, they can always change their minds later and take the funds. (quite possibly due to a temporary problem, like a hack or a a court order) To solve this problem Blockstream explicitly proposes that smaller or experimental sidechains without majority support use a "federated" model where one or more trusted authorities controls the sidechain. Of course, needless to say needing a trusted third party to keep the sidechain secure isn't a good solution in many cases - they're essentially acting as a bank and it's extremely difficult to design systems where that bank can't profitably steal all the funds.

fryguy 12y ago
I would hope that any sidechains to bitcoin that use proof of work would have a shared mining model, so that miners could mine both simultaneously.
- petertodd 12y ago
  That's the problem: merge-mining means there's zero cost to attacking a sidechain. Of course, people like to invoke economic incentives here and say there's opportunity cost with the idea that the sidechain will pay ongoing fees or something. But this is a very untested idea to put it charitably - keeping Bitcoin itself secure with only fees is widely considered to be an unsolved problem, and that problem doesn't have a reward in the form of a bunch of 2-way-pegged Bitcoins waiting to be stolen. Ultimately I think media coverage of this is really misunderstanding how sidechains are very far from a proven idea, except in the centralized model where you trust someone to maintain the sidechain. Equally it's pretty clear that they have a high risk of making the incentives behind Bitcoin mining even further tilted towards centralization of hashing power.
  - fryguy 12y ago
    I feel that the other side: zero cost to protect a sidechain, is a much bigger benefit. Presumably, the sidechain has mining rewards as well, which devalue the amount of BTC you get when going back to the main chain.
davidgerard 12y ago
Altcoins also have one important advantage over sidechains: they exist.

fryguy 12y ago

I would hope that any sidechains to bitcoin that use proof of work would have a shared mining model, so that miners could mine both simultaneously.

petertodd 12y ago
That's the problem: merge-mining means there's zero cost to attacking a sidechain. Of course, people like to invoke economic incentives here and say there's opportunity cost with the idea that the sidechain will pay ongoing fees or something. But this is a very untested idea to put it charitably - keeping Bitcoin itself secure with only fees is widely considered to be an unsolved problem, and that problem doesn't have a reward in the form of a bunch of 2-way-pegged Bitcoins waiting to be stolen. Ultimately I think media coverage of this is really misunderstanding how sidechains are very far from a proven idea, except in the centralized model where you trust someone to maintain the sidechain. Equally it's pretty clear that they have a high risk of making the incentives behind Bitcoin mining even further tilted towards centralization of hashing power.
- fryguy 12y ago
  I feel that the other side: zero cost to protect a sidechain, is a much bigger benefit. Presumably, the sidechain has mining rewards as well, which devalue the amount of BTC you get when going back to the main chain.

davidgerard 12y ago

Altcoins also have one important advantage over sidechains: they exist.