Sidechains: A technical and historical overview of what works where we’re going

The Block/Benjamin Friedrich

Quick Take

  • Sidechains simply enable users to send bitcoins to other blockchains to use and return them when finished
  • Sidechains can address trade-offs between cost and security, allow for experimentation on public blockchains, and open up use-cases for new audiences like enterprise customers
  • While there are dozens of different sidechain projects in development and many that were historically launched (and abandoned), we detail some of the most compelling offerings

A Historical Overview of Sidechains

Sidechain experiments have been around for years, dating back to 2012 and 2013-era experiments proposed on BitcoinTalk to enable “BTC-backed alternative cryptocurrencies” or ideas like Fidelity-bonded ledgers proposed by Peter Todd on the bitcoin-development mailing list. A number of different developments came to head and the current iteration of sidechains were advanced in a 2014 paper Enabling Blockchain Innovations with Pegged Sidechains written by Blockstream developers.