The new internet, sidechains and the transformation of bitcoin
The New World of the Bitcoin Network
Bitcoin, today understood as the largest digital currency and the first to be created, has many other applications that are little known by the general public today. This involves the misconception that bitcoin is nothing more than a digital currency, and not a network with countless applications.
Although blockchain technology is nothing new, having been created in the 80s, the problem that prevented its full use was the need to create a form of data verification that would ensure reliability in that network used.
Satoshi Nakamoto found the formula that allowed blockchain technology to overcome this problem and so came bitcoin, the currency. Such an innovation was so surprising that the focus, in turn, was completely directed towards the currency itself, leaving the network as a mere support for the currency. Is that really the case?
Bitcoin and the Internet
The connection system with which we communicate today, known as the Internet, is nothing more than a network, connected by optical fiber cables, in which information is transported between users, creating the so-called network.
External Internet access occurs when your local network connects to another larger network, your Internet service provider, via TCP/IP technology, a mode of communication based on the Internet Protocol (IP) address. This IP address is the address of each of the points on a network, and each point on the network consists of a computer that interconnects with other computers, forming a “network web”.
All of this works because there is always a centralized entity providing the functioning of the network and the reliability of it, unlike the blockchain network that connects through independent users that each exercises and has its participation in the maintenance and functioning of the network.
Sidechains – Bitcoin blockchain network applications
Simply put, sidechain is a side network that exists as an alternative to improving the performance of a blockchain, or creating optionalities to an existing blockchain network. Thus, sidechain’s main goal is to give mainchain scalability.
This is possible because a sidechain allows this new block chain to be connected and interact with a main blockchain. This new string contains completely different programming and resources, but is compatible with the string it joins to. As a result, both chains can communicate and complement each other’s capabilities.
Top Bitcoin network sidechains
Lightning Network: The Lighting Network is a sidechain created in Layer 2 of the bitcoin network, which aims to solve the problem of scalability in bitcoin transactions. Because all transactions on the mainchain pass through the existing blocks on it, sometimes the network became overloaded, slowing down the transactional process and making it more expensive.
So Lightning Labs developed the Lightning Network. The first sidechain aimed at decentralizing the operations that occurred in the Bitcoin blockchain by creating a network of channels that could interact with it but did not rely on it for transactions, unraveling the core network.
The Lightning network operates through independent nodes that act as validators of bitcoin transactions in sidechain. Each of them is responsible for the validation and recording of these transactions. This made the bitcoin transaction cheaper and more agile, and today it is even possible to pay for a cup of coffee through it.
LiquidNetwork: Project created by Blockstream, one of the largest cryptocurrency companies in the world. The Liquid network is a sidechain that aims to enable faster asset issuance and transactions between companies and individuals. To do so, Liquid has its own native asset called Liquid bitcoin (L-BTC) backed 1-to-1 with bitcoin. What is Cryptocurrency?
Among Liquid’s existing projects is Xdex, a decentralized broker. It came about through the idea that aims to face the biggest problem of traditional brokerages, which is the need for their clients to deposit cryptocurrencies in their environments as a way of giving ballast to these brokers, which generates problems of trust in the custody process.
In this way, a decentralized solution may be more interesting for those who like to keep their coins in their own wallets and avoid bureaucracies in issuing their tokens.
Impervious Browser: Not only transactions and markets live the applications of the bitcoin network, and the newest of these applications is the Impervious Browser. Designed in bitcoin’s Layer 3 with the idea of creating a peer-to-peer browser, the browser launched this year brings together different features that protect users while maintaining features that exist today.
Established over lightning, the browser today allows the user to make video calls such as zoom, exchange messages like whatsapp, send documents as in emails and without the need to reveal their IP identity as the current internet protocol demands.
This goal was created so that people can have their privacy re-established, since today all Internet service providers use private information from their users for their own gain. Not to mention that authoritarian governments can also make use of this same data for controlling the population.
As can be seen, the bitcoin revolution only started with the transformation of money. A new world, a new internet is forming, which if it keeps up with the speed of growth of the use of bitcoin itself, will leave many of the current companies useless in their purposes.