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In this episode of The Van Wirdum Sjorsnado, Aaron van Wirdum and Sjors Provoost discuss RSK’s move from a federal sidechain model to the project’s new Powpeg solution.
RSK is a Bitcoin sidechain similar to Ethereum developed by IOVlabs. Bitcoin users can effectively move their coins to this blockchain which operates more like Ethereum, and move the coins back to the Bitcoin blockchain when they choose. Some Bitcoin miners use their hash power to mine bots on the sidechain, and earn some additional transaction fees by doing so.
The tricky part of any sidechain is allowing users to move their coins safely between blockchains. This is technically done by locking coins on the Bitcoin blockchain and issuing matching coins on the sidechain, and vice versa: locking coins on the sidechain to unlock the coins on the Bitcoin blockchain.
So far, RSK has done this by locking the coins into a multi-signature address, for which the private keys were controlled by a group of well-known companies (known as the federal sidechain model). Most of them were needed to unlock the coins, which were not to be done unless and when the corresponding sidechain coins were locked.
RSK is now switching to a Powpeg model where the keys to the multi-signature address are controlled by special hardware modules that prevent interruptions that are in turn programmed to unlock only coins on the blockchain Bitcoin if and when the corresponding coins on the sidechain are locked, and the transactions to lock these coins have a significant number of confirmations.
Hosts explain exactly how this works, and discuss some of Powpeg’s security compromises.