ConsenSys team announced the official launch of BTC Relay, considered the first sidechain, BTC Relay will connect the Ethereum’s network with the Bitcoin’s one in a secure, decentralized way. This Relay uses the smart contract functionality in Ethereum to allow people to verify Bitcoin transactions from Ethereum’s Blockchain.
The main idea behind sidechains is that of a mechanism that allows people to send transactions not only to other addresses or accounts but to other blockchains. This simple idea has populated the mind of Bitcoin developers and members of the community for some time now. Instead of using a centralized server (like a Cryptocurrency exchange for example) to get tokens of a particular blockchain (AKA buying a crypto) you could just simply send Bitcoins to an address and have them automatically and securely converted into the blockchain’s token.
BTC Relay is an open source project that allows Ethereum’s network to talk with the Bitcoin one. BTC relay is a smart contract living on Ethereum’s blockchain, ConsenSys also announced that the BTC Relay was added to EtherEx, a decentralized exchange, users are now able to exchange both tokens in a secure fashion.
There are also plans to launch an Ethereum-based Bitcoin token or ETHBTC, this will be done by locking Bitcoins in a multi-signature wallet. BTC Relay depends on a set of community members called Relayers, they run a software to feed data from the blocks mined in the Bitcoin’s network into the BTC Relay platform, Ethereum Dapps can then make queries to the BTC Relay’s smart contract to verify activities on the Bitcoin network.
The BTC Relay project was born and nurtured under the Ethereum’s Foundation wings, but then it moved under ConsenSys belt when BTC Relay’s creator Joseph Chow joined ConsenSys. Wanxiang Blockchain Labs also gave Chow a grant to help him with the development of the project, the money was spent on independent security audits of the platform.
The inventor and co-founder of Ethereum’s project Vitalik Buterin said:
I am excited to see BTC Relay provide the first-ever production release of cross-blockchain communication of this kind, and hope that it will set an example for interoperating cross-blockchain applications, whether between Bitcoin and Ethereum, other blockchains and Ethereum and public and private or consortium chains, for many years to come.
Ethereum’s ecosystem continues to grow, many members of the cryptocurrency community sees Ethereum as Bitcoin’s rival, but in reality, they can complement each other, we may see a future where users can spend Bitcoins to rent computational power provided by Ethereum’s Virtual Machine, or to securely use Ethers to pay for Bitcoin-denominated services.