2024-11-16 –, Chaum Stage
An analysis of Bitcoin sidechains: History, use cases, designs, and the future of sidechains in the Lightning Era.
In this lecture, Andreas will explore the concept of sidechains as specialized blockchain networks that rely on Bitcoin. Initially designed as experimental environments, sidechains allow developers to test and implement changes to the Bitcoin protocol while retaining Bitcoin as the native currency. Unlike traditional testnets, sidechains provide real economic incentives, making them a valuable tool for identifying vulnerabilities and testing innovative technologies.
Sidechains can be vaguely defined as any new blockchain network which depends on the Bitcoin network and can therefore not function independently of Bitcoin.
The first Bitcoin sidechains were initially introduced as a form of sandbox for experimenting with potential changes to the Bitcoin network while maintaining Bitcoin as a native currency. This use-case somewhat overlaps with Bitcoin testnets, but can have better incentives for the purpose of testing and finding exploits in experimental technologies due to the real economic value of the sidechain in contrast to testnets.
Sidechains have also been described as a potential solution for scaling Bitcoin payments, especially before the advent of the Lightning Network, although the trust and security tradeoffs implied for this use-case are generally worse than using BTC on the mainchain or on the Lightning Network, and perhaps even more importantly, network effects of Pegged Bitcoin on Sidechains are separate from and in some sense competing with those of the Lightning Network.
Andreas Kohl is a self-taught former accountant, public policy analyst, and prize-winning Austrian Economist, recognised for writing about Liechtenstein’s unique political model. He launched his first Bitcoin start-up in 2013, introduced the Princely Family of Liechtenstein to Bitcoin in 2014, and has also since joined the first wave of Bitcoiners in El Salvador.