Create sidechain bitcoin
Elements An open-source, sidechain-capable blockchain platform. In The News. Press Releases. Brand Assets. Engineering Blog. Sidechain or Blockchain An Elements blockchain can operate as a standalone blockchain or be pegged to another as a sidechain, enabling assets to be verifiably transferred between two different blockchains. Asset Issuance Elements allows you to issue multiple different types of asset on a single blockchain, opening up many new use cases for implementation.
New Technologies Using Elements to create your own blockchain gives you access to new features and technologies developed by Elements community members. This can reduce internal development and research costs and lets you explore new applications of blockchain technologies. Being built on the Bitcoin codebase also allows Elements to function as a testbed for changes to the Bitcoin protocol itself. New Features in Elements.
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Issued Assets. Issued Assets on Elements allows multiple types of asset to be issued, reissued, and transacted using Confidential Transactions. Confidential Transactions. Transactions in Elements are blinded using Confidential Transactions, hiding the amount and type of asset being transferred. Additional Opcodes. Elements introduces several new script opcodes, in addition to the ones already supported by Bitcoin.
Two-way Peg. Implementing Elements as a sidechain allows you to transfer assets between chains in a verifiable way using a Two-Way peg. Signed Blocks. Elements uses a Strong Federation of signatories, called Block Signers, who sign and create blocks in a reliable and timely manner. Previous Elements features that have been integrated in Bitcoin. Electricity prices vary significantly due to the difficulty of transporting and storing electricity. Storing electricity in electrolytic batteries is energy-inefficient, and the batteries slowly discharge over time even when unused.
Even transporting electricity by fixed wires will dissipate some energy over distance. These factors weaken the arbitraging of electrical power. I neglect here the fact that there are other issues involved in mining: Internet bandwidth and latency, as well as local climate — in some climates the heat emitted by mining devices is a desirable alternative to heaters, while in others the heat is an additional liability requiring even more electrical power to dissipate.
Indeed, even if mining devices become commodities — shirt ironing devices use a miner instead of heating element, for example — mining will still be higher in places where electrical prices are low.
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There are arguments that increases in mining in places with low electricity prices will increase to the point that the electricity prices there will rise, making it economically feasible to start mines elsewhere and thus ensuring decentralization. However, price is determined by supply and demand, and presumably locations currently with low electricity prices have high supply relative to current demand. In order for the electricity price to equalize, demand for electricity would have to rise in proportion to the local supply, implying that the concentration of miners would still follow available electrical supply, and would still fail to be distributed according to economic significance.
In short, mining will still be centralized in locations with high electrical supply. Indeed, the fact that mining ASICs are developed and fabricated in China or nearby countries is misleading: even if ASICs were developed all over the world, there will be larger mines in places with cheaper electricity. We should consider that mining is constrained by the rules imposed by fullnodes. Thus, in case of miner centralization, in general the attacks below are what remain feasible:.
Importantly, the first two attacks impose an economic cost on the attacker, and their economic benefit to the attacker may not outweigh the costs. In fact, specialized producers of a specific good are economically bound to adhere to the desires of the consumers; that is, miners will follow the desires of the hodlers of coins, regardless of centralization.
What are Sidechains?
However, we must take note that specialization leads to fragility to level-crossing physical attacks on the network. Under SPV, however, another attack may be performed by a miner; specifically, a miner may create an invalid block where it is invalidly paid a large amount of fees, generate a small chain on top of that, and use that chain to fool an SPV client into thinking it has been paid.
Such an " inflation attack " would be much stronger in the case of centralization and prevalent SPV. It also has a higher incentive than double-spend attacks, as the purported amount does not need to be actually controlled by the attacker. It is important to note that the fees received by a miner have no consensus limit and miners have received very high fees before.
- poppy bitcoin;
- turn laptop into bitcoin miner;
This is important as transaction-tracing proofs like Peter Todd's Proofchains terminate at a coinbase transaction, whose value validity can only be judged by looking at all transactions in the block it is in. For a "normal" SPV client that is controlled directly by a human user, this can be mitigated by the human user manually verifying the blocks being received by the SPV client using some kind of block explorer.
Automated SPV clients, however, will either be under permanent risk of inflation attack, or will require constant human supervision and hence, trust that the human supervisors are paying attention, and not, for example, forgetting to turn on their alarm clocks and oversleeping. Unfortunately, SPV proof sidechains and drivechains both turn the mainchain into an automated SPV client of the sidechain.
In particular, under drivechains, mainchain miners are forced to pay attention to the sidechain in order to determine which way to vote.
In effect, it requires that mainchain miners run sidechain fullnodes for all existing sidechains in order to prevent inflation attacks on any sidechain. This also means that sidechains translate directly into softforked block size increases, with the same results as other block size increases: increased pressure for mainchain miners to collocate in order to improve transmission of both mainchain and sidechain block data. The issue of sidechain end-of-life interacts badly with the stated intent of permissionless innovation. Consider for example a situation, where a reasonably-popular sidechain already exists, that has many similarities to the mainchain.
Let us also consider the situation, that development of this sidechain is centralized, in comparison with the Core mainchain. Suppose a bright mind develops some idea for a mainchain feature, and creates a sidechain that is little more than mainchain in addition with this useful new feature. In a few months, it becomes obvious that the feature is useful, desirable, and has little or no negative effect. However, the developers of the pre-existing sidechain notice this feature, and implement it also on their own sidechain.
This is reasonably easy as the sidechain developers are more centralized than Core mainchain is. From then on, the sidechain with a new feature is at end-of-life: the pre-existing sidechain not only has the new feature, it also has by virtue of being older better network effect, and possibly other features as well. Users then desire to leave the sidechain. Again, as I pointed out earlier, at end-of-life, expected future fees are expected to drop, and present backing funds become a target for theft. In addition, the new sidechain is likely to be a relatively small sidechain, and the rest of the Bitcoin community may be unwilling to economically sacrifice the Bitcoin network to punish those who steal from the small sidechain using "nuclear options".
This suggests that permissionless innovation for existing chains already pegged to the mainchain is risky. One would have to create sidechains that are incompatible with mainchain and pre-existing sidechains such as a MimbleWimble sidechain, or other chain with drastically different transaction format , or risk end-of-life. Introduction Sidechains offer a very important ability to Bitcoin: the ability to absorb the abilities of altchains, and hereby retain its dominance in the cryptocurrency space.
But consider the reasons why a sidechain may reach end-of-life: The sidechain has succeeded. It has proven that its features are desired by many users, that the new features do not break Bitcoin's security, and so on. Because of this, the sidechain features are then added to mainchain. But, since the mainchain now contains the sidechain features while having the full security of mainchain, there will be little to no future use for the sidechain, and any sidechain miners can definitely predict that future F will approach 0 very quickly, compared to the current backing fund B.
It would be sadly ironic for the users of a sidechain to show its success and desirability, and get rewarded by having their bitcoins stolen when the sidechain features are added directly to mainchain. The sidechain attempts to implement a difficult feature and fails. Perhaps an unexpected security bug is found, or some other unforeseen catastrophe. It may be possible that not all sidechain users may be vulnerable to the sidechain's vulnerability, so at least their orderly exit from the sidechain should be supported.
Alternatively the developers may have overestimated the overall benefit the sidechain provides. Mistakes may have been made, but for some kinds of speculative functionality, it may be reasonable to allow the developers to change their mind and recommend the cessation of their sidechain. As large a pool of users of the sidechain should be able to safely exit even in this situation, if it can be arranged.
The end-of-life is made into a self-fulfilling prophecy. This sidechain miner then offers bribes to other sidechain miners to steal the money. Theft success increases the relative expected utility of the bribe versus future fees F, so rational sidechain miners may consider instead joining the thief to kill the sidechain rather than fight off the thief to retain future fees F.
This may be assisted by planting false information about a vulnerability. Drivechain The other primary alternative is drivechains, where sidechains are merge-mined with Bitcoin, and withdrawals are validated by mainchain miner voting. Merge Mining Merge mining sidechains on the mainchain is desirable, as in the end it is the same token that is being protected.
The increase in cost of operating a mine limits membership to the "caste" of miners. Request a public key from the miner. The mainchain miner includes your sidechain block hash in the coinbase, then publishes your transaction and an additional transaction that spends it to an address the mainchain miner controls.
The above technique has the disadvantages below: You need to have working relationships with all mainchain miners.