@ -27,14 +27,15 @@ Sidechains are alternate chains of Bitcoin ("Alt-chains") which do *not* have th
### Peter Todd / Luke-Jr Told Me That Sidechains Are Insecure
Drivechain's security model is commonly misunderstood (and improved upon Blockstream's original 2014 conception), so here it is, short and simple:
Drivechain's security model is commonly misunderstood. Here it is, short and simple:
1. When you send your BTC from a mainchain to a sidechain, what you are actually doing is putting it into a special account. Bitcoin miners "own" this account and can send these funds wherever they like.
2. That might sound like a problem, but it isn't because the box can only be opened infrequently (twice or three times a year), and a super-majority of miners must leave a note on the box stating exactly where they intend to transfer the money. Otherwise the money just stays there.
3. The only way anything can go wrong, is if miners leave a note on the box which doesn't match the note that the sidechain full node software auto-generated for them. It is easy to check because the notes are very short. Then, everyone in the Bitcoin community has to do nothing about the error, for *multiple months*.
4. This is unlikely because, if miners wanted to steal some money, they can already do so, much more easily, by [1] depositing BTC to an exchange, [2] selling for fiat (which they withdraw), and [3] rewriting the last 3 or 4 days of chain history, to un-confirm the deposit in step [1].
1. When BTC are deposited (from mainchain to sidechain), they are placed into a special account. Miners "own" this account, and can send these funds wherever they like.
2. That might sound like a problem, but it isn't because the box can only be opened infrequently (two or three times a year), and a super-majority of miners must leave a note on the box stating exactly where they intend to transfer the money. The sidechain software does this automatically.
3. So, to steal, miners need to write an invalid note on the box, and leave it there for multiple months. If no one interferes, the sidechain is robbed.
The lengthy delay might sound prohibitively inconvenient, but it isn't because of instant atomic cross-chain swaps. Investment-banker-types will buy your side-BTC with their main-BTC, at competitive rates.
Notice that, if miners wanted to steal some money, they can already do so, much more easily, by [1] depositing BTC to an exchange, [2] selling for fiat (which they withdraw), and [3] rewriting the last 3 or 4 days of chain history, to un-confirm the deposit in step [1].
The lengthy multi-month delay might sound prohibitively inconvenient, but it isn't because of instant atomic cross-chain swaps. Investment-banker-types will buy your side-BTC with their main-BTC, at competitive rates.
Paul Sztorc
8 years ago