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This is a very interesting detail.
So it's finally possible to use bitcoin as a public ledger, by adding the hash value of any large dataset to the "memo". Up to now, we needed workarounds involving non-existing account, such as provided by Bitcoinproof: https://vog.github.io/bitcoinproof/
Earlier quoted context omitted.
The federated model is a temporary solution, as a workaround due to the lack of native support in Bitcoin Testnet. Once the Bitcoin network itself can validate the SPV proofs from the sidechain, this model will be replaced with a completely decentralized one.
What's the incentive for people to merge mine this? Namecoin issues its own currency, and it only has a third of the hashrate of Bitcoin. If this sidechain follows that example, it seems like it will be much easier to mount 51% attacks and forge proofs.
Earlier quoted context omitted.
The federated model is a temporary solution, as a workaround due to the lack of native support in Bitcoin Testnet. Once the Bitcoin network itself can validate the SPV proofs from the sidechain, this model will be replaced with a completely decentralized one.
What's the incentive for people to merge mine this? Namecoin issues its own currency, and it only has a third of the hashrate of Bitcoin. If this sidechain follows that example, it seems like it will be much easier to mount 51% attacks and forge proofs.
This is arguably a better incentive than altcoin mining since miners would be paid in real bitcoins.
Earlier quoted context omitted.
What's the incentive for people to merge mine this? Namecoin issues its own currency, and it only has a third of the hashrate of Bitcoin. If this sidechain follows that example, it seems like it will be much easier to mount 51% attacks and forge proofs.
The sidechain doesn't have mining. It has "trusted functionaries". Or so the white paper seems to say.
"2-way peg" Moving coins from the side chain back to the main chain is the hard part. The white paper says you "use the proof to unlock a number of previously-locked outputs with equal denomination on the parent chain." You have to lock up N bitcoins to create N side chain coins, but those form part of a locked pool which can later be used to redeem sidechain coins. It's conceptually elegant, but the process is compl…
>Uh oh. Remember Paycoin, with its "Prime Controllers" and "guaranteed minimum value". That didn't end well. The whole point of all this cryptographic machinery is supposed to be to eliminate the need to trust some central party or parties. Personally, I'd compare this to Ripple; semi-centralized transaction timestamping seems to work ok for them. >It's conceptually elegant, but the process is complex and delicate. L…
But the whole thing about not creating additional currency units actually seems fairly arbitrary to me, given that this adds a whole bunch of otherwise unnecessary complexity.
The fallback exchange mechanism for sidechains is based on an atomic exchange algorithm that is well known for many years now.
This is something that could easily be standardised in the form of a relatively simple 'pay on reveal secret' transaction type to permit decentralised exchange between arbitrary pairs of blockchains, as I discussed in the following blog post: http://upcoder.com/11/atomic-cross-chain-exchange/
I understand the people in the Bitcoin community are trying to prepare for the future, but is there any evidence at all that Bitcoin transactions will grow to a point where the blockchain can't handle them and sidechains will actually be necessary?
I understand the people in the Bitcoin community are trying to prepare for the future, but is there any evidence at all that Bitcoin transactions will grow to a point where the blockchain can't handle them and sidechains will actually be necessary?