With sidechains, altcoins are obsolete, Bitcoin smart contracts are possible, Bitcoin Core and BitcoinXT can coexist, and all hard forks can become soft forks. Cool la1ths bitcoin miner to Bitcoin are on the way!
Update: This project now has its own website! See the literature page for the latest changes. Explain how an SPV proof works. Reminder Sidechains allow Bitcoin to be fully programmable. That’s what we’ll be doing here. What is a two way peg?
The question is: how do we pull that off? I will first describe the problem and then my solution. Requirements It is easy to get coins to change their protocol rules: we can already do that, with Altcoins. Bitcoin is your property, and you can already send it to any address you want, including addresses which imprison the BTC forever.
OP_RETURN data enters the Bitcoin blockchain. This transaction references the transaction in steps 1-3. Figure: it is easy to do one-way pegs. Bitcoins from being affected by these new rules. This implies that, by definition, the Bitcoin chain can’t even be aware of the Sidechain’s rules.
Otherwise we’d have a hard fork. However, the mainchain must be aware of the sidechain’s quantity. Otherwise, we would be at the opposite extreme, where we’d instead have an Altcoin. Awareness Instead, we need something which is just aware enough: ignoring the details of each sidechain, but observing the net quantity deposited.