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I have private block chain - tweaked bitcoin blockchain with a private coin by creating a Genesis block. Lets call it "PrivateCoin"

I also have a sidechain elements/alpha instance, I effectively transferred PrivateCoins to sidechain using the two way pegging. The transfer is successful and I am able to spend the "PrivateCoin" in Sidechain. (Did some dirty hacks for address format, chainparams to accomplish it! Though no validation was compromised)

I see sidechain pegging is very Bitcoinish! Hope it will soon be clearly configurable for private coins.

Now the questions,

  1. Can sidechain mint have its own asset such as a"SideCoin", so that "SideCoin" and "PrivateCoin" can co-exist? If Yes, How to? Strategy?

  2. Can we create "SideCoin" at a deterministic exchange rate for the "PrivateCoin"?

    Ex: If I peg transfer 10 "PrivateCoins" from the parent chain, I would like to create 200 "SideCoins" at a exchange rate of 1:20. If this is possible.

    How to? Is it readily configurable in sidechain -or- should be coded in ?

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  • Possible duplicate: bitcoin.stackexchange.com/q/32367/18196
    – morsecoder
    Commented Jul 31, 2015 at 11:12
  • Hey Stephen, Yes, Q1 can be called a duplicate.I read this chain a week before. I am not working with Bitcoins, thought of finding if there is technical feasiblity of 2 coins existing in a block chain. Now after some code walk through, experiments and self realization ;). I understood it is not possible. Thank you anyway.
    – Subbu
    Commented Aug 3, 2015 at 5:59

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No, you cannot set the exchange rate between your private coins and the pegged coins, because you cannot issue the pegged coins yourself.

The chain the pegged coins come from do still keeps track of how many coins were moved out, and there can't be more that come back. That would violate the sender chain's consensus rules.

So say your sidechain holds 100 pegged BTC, and 100000 private coins. If these were cheap to create, people would immediately convert them to 5000 pegged BTC using your 1:20 exchange rate, and try transferring them out. However, only 100 BTC can move back, because from Bitcoin's point of view, that's all what exists. You get effectively get a "run on the bank", and the peg mechanism fails afterwards, because you did not respect the rule that you can only have as much pegged BTC as there are real BTC backing it.

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  • Understood. Hence the only way to create assets in sidechain is using github.com/ElementsProject/elements/tree/multi-asset-0.10 . No two coins co-exist.
    – Subbu
    Commented Aug 3, 2015 at 6:05
  • Does elements follow the Open Asset Protocol?, or is it a completely different with similar capabilities?
    – Subbu
    Commented Aug 3, 2015 at 6:07
  • Alpha does not support multiple currency types yet, though this is being worked on for a successor. With that, there is also no need for colored coins: those are only a hack to encode asset type information in a block chain that does not have it natively.
    – Pieter Wuille
    Commented Aug 3, 2015 at 20:42

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