Understanding Side Chains
A side chain is a secondary blockchain that is linked to the main chain through a two-way peg. This peg enables the smooth transfer of tokens and digital assets between the two chains.
Imagine a decentralized network that consists of multiple independent blockchains, each with its own unique rules and purposes. These blockchains, known as side chains, are interconnected to create a cohesive ecosystem.
An example of a side chain is the Liquid Network, which acts as a settlement layer for traders and trading platforms. By being pegged to Bitcoin, the main chain in this case, the Liquid Network enables faster and more private transactions, as well as the creation of digital assets.
The process of using a side chain involves sending coins or digital assets from the main chain to a specific output address, where they become locked and unspendable elsewhere. Once the transaction is confirmed and a waiting period has passed for added security, the coins or assets are fully transferred to the side chain. This allows users to freely move them within the new network. If desired, the coins can be sent back to the main chain by reversing the process.
Side chains can have different functions and purposes. For example, both Liquid and Rootstock are side chains of Bitcoin, but they serve different roles. Liquid focuses on facilitating faster transactions, while Rootstock is specifically designed for efficient smart contract execution.
Ethereum 2.0 introduces its own version of side chains called shard chains. These shard chains are connected to the recently launched Beacon Chain, which aims to become the main chain for Ethereum’s proof-of-stake (PoS) consensus mechanism.
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Side Chain
Understanding Side Chains
A side chain is a secondary blockchain that is linked to the main chain through a two-way peg. This peg enables the smooth transfer of tokens and digital assets between the two chains.
Imagine a decentralized network that consists of multiple independent blockchains, each with its own unique rules and purposes. These blockchains, known as side chains, are interconnected to create a cohesive ecosystem.
An example of a side chain is the Liquid Network, which acts as a settlement layer for traders and trading platforms. By being pegged to Bitcoin, the main chain in this case, the Liquid Network enables faster and more private transactions, as well as the creation of digital assets.
The process of using a side chain involves sending coins or digital assets from the main chain to a specific output address, where they become locked and unspendable elsewhere. Once the transaction is confirmed and a waiting period has passed for added security, the coins or assets are fully transferred to the side chain. This allows users to freely move them within the new network. If desired, the coins can be sent back to the main chain by reversing the process.
Side chains can have different functions and purposes. For example, both Liquid and Rootstock are side chains of Bitcoin, but they serve different roles. Liquid focuses on facilitating faster transactions, while Rootstock is specifically designed for efficient smart contract execution.
Ethereum 2.0 introduces its own version of side chains called shard chains. These shard chains are connected to the recently launched Beacon Chain, which aims to become the main chain for Ethereum’s proof-of-stake (PoS) consensus mechanism.
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