Sidechains: Highlights and Challenges

Abstract

The revolutionary concept of blockchain and its applications are spectacularly drawing more and more attention in today's world. The crypto-currency platforms have been on the forefront of implementing blockchain technology. However, the capabilities of blockchains are not limited to monetary transactions. Introduction of smart contracts allowed development of various distributed applications. As the need for blockchains continues to grow, there is also a strong demand for larger, more scalable and more flexible "multipurpose" chains. Conventional blockchains (even the ones supporting smart contracts) cannot comprehensively cover these requirements. To address these issues, the concept of sidechains has been introduced. This paper provides a brief overview of sidechains, explains how they work, discusses their benefits and drawbacks; moreover, describes how they can be built using relevant software and tools.