Bitcoin cannot become the safest exchange platform for sidechain coins to create and maintain a coin which is needed for venture capital investment, say industry insiders. This is despite that the quest for a coin by new startups or existing companies has increased of late. They want to use these coins to exchange revenue and cash holdings with investors who are willing to buy into firms’ ideas and financial potentials.
Also, Bitcoin stands out as a plausible option to be considered to resolve the exchange issue since the sidechain allows the use of a Bitcoin-like system without going through the risk and effort of buying the native tokens for that platform. What is a sidechain?
According to the Director of Research at Coin Center, Peter Van Valkenburgh , a sidechain is effectively an alt-coin (i.e. a different Blockchain keeping track of the movements of a different batch of scarce tokens), but it has a pegged exchange rate with Bitcoin.
Van Valkenburgh writes: “Given the fixed conversion rate and the automated/deterministic process for conversion, it may be more appropriate to think of sidechains as new Blockchains that the user can simply move their Bitcoins into and out of at will.” He cited one of the main technical challenges of the sidechain approach to be how to ensure that pegged Bitcoins can be recovered by honest sidechain users, and never dishonestly by interlopers. This requires a sophisticated technical arrangement and, for the most secure implementation, minor adjustments to the Bitcoin protocol itself—something that will ultimately require the political will of the community to enact. Bitcoin not a good fit Max Kordek , co-founder of Lisk , thinks Bitcoin is not the right platform for the task. He notes that at the moment he doesn’t see any significant progress, development, or marketing for Bitcoin-based […]
