As mentioned in earlier posts, any Blockchain network is a distributed ledger maintained by multiple computers using a program that runs the network by a fixed set of rules. Most popular blockchain like Ethereum and Bitcoin encourage the people to run computers that support the operation of blockchain by offering rewards what can be won by competitive mechanism called mining. This competitive process ensures that all transaction are recorded only after proper validation and in an irrefutable manner.
However, the mining is an expensive process for the miner as well as the person ordering the transaction has to pay a fee to the miner. Not all applications of blockchain require this kind of security and in many cases the person using the application will not be willing to pay the miner for each transaction. This is especially the cases in application such as blockchain powered games or social networking sites, where the security of transaction is important but not be financially critical.
In such cases it is possible to make applications with security, transparency, relative decentralization and other features of the blockchain while having very high scalability, instant transaction validation without paying fees by running the application on a side-chain. The cryptoassets and tokens can also be transferred to and from the sidechain to the main blockchain as required. The sidechain can have its own different rules and mechanisms of operation while still being compatible with the main blockchain.
One popular exampleof sidechain is the Loom network which runs as a sidechain to Ethereum blockchain. This sidechain used a system called delegated proof of stake mechanism to validate transaction. Instead of miners, designated group of validators are given the responsibility of validating the transactions. TO become a validator, one has to stake a very large amount of their Loom Tokens and if they are found to be engaging in illegal behaviour they stand to lose their tokens. The reward for validators is proportional to the Loom Token that they are able to stake. Anyone who possess Loom token can stake their tokens to support the validators who is ready to share more percentage of the reward or one that they consider trustworthy.
In the future, it may be possible for many applications to seamlessly integrate with blockchain and have many enhanced features of the blockchain while being compatible with many other platforms due to possibility of operating on sidechain and similar mechanisms.
