What are SideChains and Why Should I Care? - Bitcoinist.net

What are SideChains and Why Should I Care?


SideChains. No, SideChains is not the brother of prominent rapper 2Chainz (although it could be in the future, you never know).


What Are SideChains?

SideChains were first announced by Adam Back and Austin Hill on Let’s Talk Bitcoin. SideChains are basically new “blockchains” pegged to bitcoin similar to how the dollar used to be pegged to gold before Nixon removed the dollar from the gold standard in 1973. In theory, each SideChain would service a different purpose however they would all benefit from the adoption and benefits of bitcoin. Proponents of sidechains hail it as the end of altcoins while alternative cryptocurrency enthusiasts argue that sidechains could be used for altcoins as well and bolster the cryptocurrency industry as a whole.

Possible Benefits of SideChains

SideChains could increase the strength of bitcoin. Like a hydra, if one sidechain is compromised, only the bitcoins used on the sidechain would be lost.

How Does It All Work?

SideChains work with a “two-way pegging system”. The system serves to move Bitcoins back and forth between the sidechain and the blockchain. Allowing Bitcoins to be transferred back and forth at will and ultimately ensuring that the transferred Bitcoins won’t be lost forever from the original blockchain.

Most Importantly, Why Should I Care?

In theory, SideChains are an extra level of security for your bitcoins. The Bitcoins in the sidechains could still communicate and operate with the original blockchain but would be unaffected by any hacks or vulnerabilities that occur in the sidechains leaving the blockchain and your bitcoins safe.

Ultimately we will see where this new technology takes the bitcoin ecosystem…like everything in this new fledgling industry, take it with a grain of salt and stay hyper-vigilant.


Marco Pineda

Marco Pineda

Marco covers topics aimed directly at spreading knowledge of and supporting the growth of Bitcoin, cryptocurrencies, health and tech. Marco is also a Lifeboat Foundation New Monetary Systems Advisory Board Member. Follow him on twitter: @marcoapineda13