What Does Blockchain Sidechain Mean? (What is a Sidechain Coin?)
What does blockchain sidechain mean? What does blockchain sidechain mean? In sim
What does blockchain sidechain mean? What does blockchain sidechain mean? In simple terms, it is a way of linking two connected ledgers to facilitate transactions. If you want to perform bidirectional operations or transfer digital assets between multiple chains, these accounts can be referred to as “sidechain nodes.” This eliminates the need for third-party involvement.
Literal interpretation shows that “chain” refers to an independent data structure that contains multiple data points, such as Ethereum, Bitcoin, etc. However, different applications require the use of different types of data points (e.g., smart contracts, decentralized exchanges, etc.). This can also be understood as each block within a single blockchain being packaged into the same hash value.
What is a Sidechain Coin
What is a sidechain coin? What are sidechains? What is a sidechain coin and what is it used for?
Sidechain coins refer to cryptocurrencies or tokens based on sidechains. In this article, we will introduce what sidechain coins are and their impact on Bitcoin and other blockchain networks.
We know that sidechain coins are scalable and secure. They act as bridges between digital assets and blockchains, implemented through smart contracts. Cryptocurrencies on the sidechain have varying degrees of interoperability with other native cryptocurrencies. If there is a demand, they can be integrated into stablecoins or cryptocurrencies issued on Ethereum.
The currently supported sidechain protocols for Ethereum and Binance Smart Chain include zkEVM, CosmosSDK, and Tendermint consensus algorithm. These technologies can all be deployed through sidechain protocols. Sidechains allow trading parties to send messages and exchange value (such as BTC) with each other, and then receive funds from other chains. This means that there is a certain level of cross-chain communication.
Why use sidechain protocols? Because sidechains are trustless and decentralized systems that allow transactions to be completed off-chain without relying on external validators to prove that transactions are controlled by the private key signed by a certain entity.
As this approach is susceptible to fraudulent behavior, most people believe that without a separate “main” participant, they cannot access all blockchain information. However, it doesn’t necessarily require an individual to participate separately.
Sidechains allow users to choose which blockchain they want to use, instead of just focusing on their own blockchain—such as Bitcoin—to ensure that they do not hold any bitcoins. They can also choose to use Ethereum sidechains as collateral. For example, the ETH2.0 plan introduces a new proof-of-stake mechanism—PoS, which is known as sharding design. (Reference link: https://github.com/ethereum-eth-deployer)
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