Imagine a way for bitcoin to have an ethereum like system without clogging up the main chain. That rsk.co
a way for bitcoin to have an eth killer. Here my very long explanation:
RSK is a smart contract platform that adds a Turing Complete Virtual Machine — a “world computer” — to Bitcoin. Additionally, RSK achieves 100-300 transactions per second on chain and confirms most payments in less than 20 seconds, while leveraging Bitcoin's proof of work security.
RSK is a Bitcoin Sidechain — a separate blockchain that carries a separate token but is able to exchange tokens back and forth with the main Bitcoin blockchain. Users can move bitcoin to the RSK chain, make use of the converted bitcoin, and then eventually move their tokens back, as bitcoin, to the main blockchain.
To put bitcoin back into the main Bitcoin blockchain, a RSK transaction fee has to be paid. There is no concept of mining for coin creation, since all coins come from the Bitcoin blockchain, but there is the all-important concept of merged mining: miners can run both blockchains and receive fees for validating bitcoin transactions as well as for running RSK contracts. It is expected that merged mining should provide sufficient incentives to miners.
But with the Lumino Transaction Compression Protocol (LTCP), RSK will be able to process up to 2000 tps on chain! And once the Lumino Network is deployed over RSK, it will allow up to 20k tps off-chain taking Bitcoin to Visa processing levels.
And here how they will peg/back rsk bitcoin aka smart bitcoins with real bitcoin.
I got it from their site:
The 2-Way peg is often said to be a method to transfer BTC into SBTC and vice-versa. In practice, when BTC are exchanged for SBTC, no currency is “transferred” between blockchains. There is no single transaction that does the job. This is because Bitcoin cannot verify the authenticity of balances on another blockchain. When a user intends to convert BTC to SBTC, some BTC are locked in Bitcoin and the same amount of SBTC is unlocked in RSK. When SBTC needs to be converted back into BTC, the SBTC get locked again in RSK and the same amount of BTC are unlocked in the Bitcoin blockchain. A security protocol ensures that the same Bitcoins cannot be unlocked on both blockchains at the same time.
How it works:
When a Bitcoin user wants to use the 2-Way Peg, he sends a transaction to a multisig wallet whose funds are secured by the Federation. The same public key associated with the source bitcoins in this transaction is used on the RSK chain to store the Smart Bitcoins. This means that the private key that controlled the Bitcoins in the Bitcoin blockchain can be used to control an account on the RSK chain. Although both public and private keys are similar, each blockchain encodes the address in a different format. This means that the addresses on both blockchains are different.
The big problem with side chains right now is it kinda somewhat centralized aka remember me stating the federation?
The RSK platform will be launched with a Federation of well-known and respected community members (blockchain companies with high security standards). Each member is identified by a public key for the block checkpoint signature scheme. The Federation is able to add or remove members using an on-chain voting system. The conditions to become a Federation member (known as Federation Member Requirements or FMR) establish basic security policies and legal requirements that all members must meet.
The Federation will provide several services to the network. Some of them will be available at launch and other will be added later. Each member can choose to provide any of the following services:
Two-way peg with Bitcoin
Checkpointing services
However when Core( i think they will Blockstream is supporting side chains)adds special opcodes or extensibility to validate SPV proofs as a hard-fork, or to manage a drivechain, the Federation role as STTPs in the 2-Way peg will no longer be necessary. Until that happens, we expect the Federation and the sidechain validation to coexist.
And the for the checkpoints
By default, clients stop using federated checkpoints when if RSK hashing power is over 66% of the maximum BTC hashing difficulty observed in the best chain and the fees paid in a block are higher or equal to the average reward of a Bitcoin block. However, any user can re-configure this local policy.
So pretty much for rsk to be decentralized it must have 70% of bitcoin hashpower(luckily 90% has agreed to merge mine it so that part is out of the way) and core adding the protocol for sidechains then the federation will be deactivated
Ok, at the face of it that would seem complicated (like everything else in crypto) but good. I'd have to revisit each point and do more research to really have a full position on it, but Bitcoin Core being the experiment that it already is... I say go for it ! =)
On Bitcoin Cash, as long as it didn't hinder the main chain itself from being used as normal, that might be something we could adopt in part as well. (such plans are already in the making actually)
I did hear about it before, but there are so many different concepts with different names. Many that were supposed to be implemented back in the day were also scrapped later. Still, it's all very exciting.
Bitcoin cash won't add sidechains. https://medium.com/@luxushub/why-bitcoin-cash-will-become-the-dominant-bitcoin-in-the-next-month-f42708d60705
And more articles like it. And the thing is the transaction are not recorded on the main chain so it not the peer to peer idea since on it another chain using lightning network and a segwit like chain which does “Transaction compression means data reuse,” Lerner admits, “which means that Lumino higher compression is a tradeoff for lower privacy”.
But do not worry due to the big blocks of bitcoin cash, bitcoin cash can have it own eth killer onchain. https://news.bitcoin.com/counterparty-bitcoin-smart-contracts/
Pretty sure it will be their own counterparty like thing.
Yes, well that's what I was saying, the risk with side chains as with any layer two application is the shifting of all the action to those chains rather than the first or it being used as an excuse to restrict the main chain. As you put it, it's no longer peer to peer.
I hope with larger blocks and much else, it will work a heck of a lot better... preferable would be to do it quite differently and try to do away with the "gas" fees, but that might be hard without any side chain whatsoever.
It works for counterparty they made an on chain eth smart contract system. I am so glad to have a civilized conversation with a bitcoin cash supporter. While i am for core it nice to have some with ideals they cna back up . Thank you!
Well, it doesn't quite work right now with counterparty. That's why some coins have migrated from it to eth20 instead. But it possibly could work a whole lot better.
Same to you =) I'm so tired of the yelling, name calling and brigading everywhere I go. Instead, this is how every conversation should be!
Actually it does work in counterparty. Coins have migrated from it to eth20 instead bc the bitcoin fees. It on chain after all. Since its onchain eth contracts it shares the same btc fees as you would send bitcoins.
Counterparty ideas works best on a low fee on chain platform.
Yes, sorry if that was unclear. I meant because of the network congestion and high fees.
Still, I would love to see a more EOS style advance, if at all possible. (As much as I understand that it would be hard to do and would require some innovative coding) The Ether/Counter party style works, but it's not optimal in terms of user experience and requirements.