Here’s Rootstock’s Spin on the Bitcoin Sidechains Concept

Rootstock is a Bitcoin sidechain currently in development by RSK Labs. It is a platform for distributed smart contracts, much like Ethereum, but the fact that it’s a Bitcoin sidechain means that it will use the bitcoin currency by default.

Although the sidechain idea has mainly been developed by Blockstream over the past few years, Rootstock has decided to put their own spin on the concept. During a recent interview with Epicenter Bitcoin, RSK Labs Chief Scientist Sergio Lerner explained how the two-way peg, which allows users to transfer bitcoins between blockchains, will work with Bitcoin and Rootstock.

Rootstock’s Hybrid System for a Two-Way Peg

In addition to the original version of sidechains that was originally announced back in April 2014 by Blockstream’s Adam Back and Austin Hill, there are also a few other, unique ways to enable a two-way peg between Bitcoin and another blockchain.

“There are several ways to implement a two-way peg,” Lerner told Epicenter Bitcoin. “One is the sidechain concept that was developed by Blockstream, and the other is the drivechain concept that was developed by [Bloq Economist] Paul Sztorc. The third one is basically have a set of notaries that have custody of the funds that are transferred to the Rootstock platform.”

Rootstock has created a hybrid system that combines all three of the mechanisms for a two-way peg mentioned by Lerner. “On the Rootstock side, we have a sidechain; on the Bitcoin side, we have a mixture of federation and a drivechain, which allows miners and a set of renowned parties to have custody of the bitcoins that are transferred to the Rootstock platform.”

Lerner is the author of a Bitcoin improvement proposal (BIP) that would add a new opcode to enable drivechain capabilities.

Progressive Decentralization

One of the key philosophical tenents of the Rootstock project is the concept of progressive decentralization. “No consensus system or blockchain can go from completely centralized control to fully decentralized control,” Lerner explained. “There should be intermediate steps to go from one point to the other to get assurance that the network is performing as desired.”

The bitcoins on the Rootstock platform will essentially be held in a federation of notaries at first. Over time, these notaries will receive less power and the miners (Rootstock is intended to be merge mined with Bitcoin) will take over control of the two-way peg.

The initial federation of notaries will be in control of a multisignature address (known as the exit address) on the Bitcoin blockchain. The bitcoins in that address will be active on the Rootstock platform and verified via an SPV proof on the Rootstock side. The security model of this federated peg is somewhat similar to that of voting pools in the Open Transactions system.

Lerner noted that it’s very important for the project to eventually move to the model controlled autonomously by miners and away from this federation of notaries.

Rootstock’s Federation of Notaries

For Rootstock to be secure in the early days, the notaries who are part of the federation need to be of the highest quality. To this point, Lerner stated, “We are choosing the [notaries] to be the most important companies in the Bitcoin ecosystem.”

“This federation has no authority or a way to make unauthorized use of the bitcoins that are transferred to the RSK platform,” Lerner continued. “In the RSK platform, there is a smart contract, which we call the bridgemaster, that orchestrates the creation of Bitcoin transactions, and the federation only has to take these transactions, sign them, and put them in the Bitcoin network. So they have no authority to create their own transactions [on the Rootstock blockchain].”

Of course, the federation could still collude to steal the bitcoins on the Bitcoin side of the two-way peg, but Lerner does not believe this to be a serious risk. “The federation have a reputation they protect; they are part of the Bitcoin industry,” he argued.

Lerner noted that RSK Labs is working with some of the largest and most well-respected ewallets and exchanges from each continent to gain a high level of security for the custody of bitcoins that are held by the federation of notaries. These members of the Bitcoin ecosystem already have already implemented advanced security standards and practices for their own businesses.

For further reading on Rootstock’s version of the two-way peg, you can download their technical paper on the topic. Rootstock is currently in the private testnet stage of development, and the testnet is expected to be made public in a few months.