People have been talking a lot about side chains, but I thought this has been around for a while under a different name. Coins like Namecoin, Devcoin, ixcoin, i0coin, groupcoin, etc are all merge mined and have existed long before I ever heard the term "Side Chain".

Am I correct in my assumption that side chains are just a rose by another name (previously merge mined coins)? Or is there something I am missing here?

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    I wonder if two or three unrelated concepts got mixed up in your question. "Sidechain" evokes the idea of blockchain forks in me, which isn't merged mining, and neither has any relation to "China's ban" as far as I am aware. Could you elaborate to explain the relationship, or provide links for additional details on these terms in whatever context there is a relation between them? – pyramids Apr 13 '14 at 18:56
  • Perhaps I shouldn't have mentioned China, as it is indeed unrelated. I will remove this, but still I don't understand how sidechains work and will be implemented. From what I've read it seems like merge mining but why not just call it that? Some examples of how new side chain coins will work (if they are already in existence) or links to whitepapers explaining this will be much appreciated :) – Mark Apr 13 '14 at 19:02
  • Also Feathercoin forks from Litecoin blockchain, so would this be a side-chain? I am looking for a clear definition of what is an alt chain or would like to know if it's just a buzz word which is being used with multiple meanings. – Mark Apr 13 '14 at 19:05
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    It will help if you provide links to the places where this term is being used. Without context it is difficult to narrow down what this relates to. Sidechains could refer simply to shorter chains than the main blockchain (orphaned blocks) or parallel chains that will get partial mining reward in coins that use the uncle/nephew family tree reward system, or even forks into new coins, from your last comment. Not every use of a term is with its widely accepted meaning, so in the context you saw it we don't know exactly what was meant unless we look at it in place. – trichoplax Apr 14 '14 at 16:41
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    Is this related to this question on sidechains? – trichoplax Apr 14 '14 at 16:53

A side chain is a blockchain that runs parallel to the main bitcoin blockchain and can synchronize with it directly, allowing decentralized value transfer between the two chains. A user is able to essentially lock up a certain amount of coin on the main bitcoin block chain which then frees up an equivalent amount of coin on the side chain. This side chain may be either a sidechain compatible altcoin or just some test ground for new Bitcoin features. The coin that was transferred to the side chain can be returned back to the main bitcoin blockchain at any time. The value transferred back will be the same as the value transferred out.

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  • This is the kind of thing I've been hearing about side chains. Thanks for the info! Here is what really confuses me, how does the value transferred out of bitcoin make it back to bitcoin, is this dependent on the side chain's exchange rate? I have heard "atomic swapping" is a method but this can be used for anycoin to anyothercoin, and is not in itself a way to store coins. – Mark Apr 30 '14 at 14:35
  • See blockstream.com/sidechains.pdf (Disclaimer: I'm a co-author of the paper). – Pieter Wuille Jan 21 '16 at 15:46

Sidechains are chains which allow 2-way peg, that is, moving bitcoins to the sidechain and then back to the main chain without trusting any third party, like you do, for example, when you move Bitcoins to say, Ripple (there you have to trust Bitstamp or another gateway). As such, there's no sidechain in existence, simply because the technology has not been implemented yet.

2-way peg is orthogonal to merged mining (you can do each of them separately or both). It is generally assumed that a sidechain would have merged mining because the bitcoin wizards designing sidechains accept that merged mining is generally desirable because of its superior security properties.

Compared to atomic swapping, 2 way peg is much slower but it doesn't require a counterpart that wants to move coins in the other direction. So when sidechains are implemented, it is likely that most of the transfers are done with atomic swapping and only the first movements are done with 2 way peg, which is mostly there as a last resort in case you can't find someone else that wants to move the same quantity in the opposite direction.

Here are more details on how 2-way peg works:

How is a side-chain merging back to Bitcoin chain protected against double-spend? Where are the side-chain mining fees?

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