I've been reading about Blockstream and Liquid but I was under the impression that sidechain was something that would require changes to the Bitcoin Core platform. Is that correct? I mean, is the bicoin blockchain already supporting a "peg" to another sidechain? Can I already launch my own sidechain like Blockstream did?
I want to launch my own simple sidechain pegged to bitcoin for testing purposes. Can it be done?
The seminal whitepaper on sidechains, "Enabling Blockchain Innovations with Pegged Sidechains," describes modifying Bitcoin's Script to support simplified payment validation (SPV):
To use Bitcoin as the parent chain, an extension to script which can recognise and validate such SPV proofs would be required. At the very least, such proofs would need to be made compact enough to fit in a Bitcoin transaction. However, this is just a soft-forking change⁹, without effect on transactions which do not use the new features.
⁹A soft-forking change is a change which only imposes further restrictions on what is valid inside the chain.
However, this is for a "two-way peg."
For a so-called "federated peg," which does not require a modification to Bitcoin, see Appendix A of the whitepaper or circa 15 min. into Greg Maxwell's presentation.
1Sorry but I didn't get it. Does bitcoin support sidechain at the moment or not? How did Blockstream do it if it does not support? Jan 29, 2016 at 17:22
@PeterMel No, it would require a modification to Bitcoin's Script. Jan 29, 2016 at 17:23
1So how did they launch Liquid !!!??? Jan 29, 2016 at 17:25
@PeterMel I think they mean they launched the project, not that it's been implemented in the actual Bitcoin network. Jan 29, 2016 at 19:13
1@PeterMel Also, see my edit regarding "federated pegs." Jan 29, 2016 at 20:22