How to Explain Sidechains to a Parent

Bitcoin. Blockchain. Sidechain.

Bitcoin is not easy to explain. Neither is the blockchain.

That leads to another technical term that has arrived to cryptocurrency world. That’s right, we’re talking about…

But what are sidechains?

We’re glad you asked…

Because we asked some experts on ZapChain to explain it.

There is not a lot of ability for experimentation on the bitcoin blockchain.

Because of this, sidechains were proposed as a way to test new theories.

Number of unique bitcoin addresses used over the past year.

“The bitcoin network is reaching scaling limits. Sidechains act as a sort of relief valve for the bitcoin network.”

Noor Al-Hajri, Enthusiast

To test bitcoin’s scaling limits, a company called Blockstream, which has raised $21 million from investors, proposed the sidechains concept.

A proposed visualization for how sidechains work.

“Sidechains allow experimentation with new features & capabilities for bitcoin without risking the entire network.”

— Russ Harben, Enthusiast

With sidechains, bitcoins can move to an experimental blockchain by using a two-way peg to enable a gateway for testing new concepts.

How the two-way peg connects the bitcoin blockchain to sidechains.

“Sidechains let anyone transfer coins from one blockchain to another. It can be very useful if we wanna create “better” bitcoin networks.”

— Louison Dumont, Founder & CEO @ Bitproof

The use of sidechains allows engineers to attempt interesting ideas with cryptocurrencies — like smart contracts, digital identity and other research.

Sidechains enable new opportunities to try things in cryptocurrency.

“Sidechains are a way to build other digital currencies like bitcoin but leaving a lot of room for innovation.”

— Matthieu Riou, co-founder BlockCypher

Today there are hundreds of alternative crytpocurrencies (altcoins) other than bitcoin. Most of them are very experimental, and usually die out.

All-time growth in bitcoin transactions (grey is on-chain, blue is off-chain).

“Effectively, [sidechains allow] altcoin development and innovation, without each new chain having its own currency but using bitcoin.”

— Matt Bell, founder Mercury

Cryptocurrencies are still new, and there’s a still a lot to learn. Sidechains allow for this…

…using the power of bitcoin to try new and untested ideas.

Interested in learning more about bitcoin?

Join us on ZapChain, we’d love to meet you.