Sidechain

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Sidechains are an approach to solving the scalability problem of bitcoin, wherein block size and the block confirmation interval present problems to some users. Sidechains remove bitcoins from the bitcoin blockchain for use away from the bitcoin protocol but still with the ability to be returned to the bitcoin blockchain. Once set aside from the blockchain, these bitcoins can be transformed into other coins which can, for example, more easily support smart contracts. A sidechain is meant to address the issue of time vs. security wholly within the bitcoin environment.[1]

Drivechain, one of the earliest technologies developed for sidechain applications, may provide certain efficiencies by allowing more than one sidechain to use the same dedicated pool of Bitcoins. The first release of Drivechain to the testnet environment was announced on September 24, 2018.[2]

On October 10, 2018 Samson Mow, head of strategy, announced that Blockstream had launched the Liquid Network with a consortium of bitcoin exchanges and service providers. Touting the Liquid Network as "the world’s first production Bitcoin sidechain," Blockstream says that the platform enables transactions between different blockchains by using the platform's native coin, Liquid-Bitcoin.[3]

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