The release of a whitepaper on a new innovation in Bitcoin called sidechains was accompanied by the launch of a for-profit company called Blockstream. Blockstream was initiated by cryptographic entrepreneurs Adam Back and Austin Hill for the purpose of “extending the capabilities at the protocol level to support massive scaling of bitcoin and blockchain technology to a broad range of asset types.”
Blockstream has several top Bitcoin core developers on the team, including Gregory Maxwell and Pieter Wuille. The company secured $21m in seed funding from multiple investors including Google Chairman Eric Schmidt and LinkedIn Co-founder Reid Hoffman during Q4 2014. While Blockstream’s focus is on innovating Bitcoin capabilities through sidechains, there is little information on the company’s business model or service plan. However, Reid commented that he sees Blockstream as similar to Mozilla, an organization that supports open-source internet technologies such as the Firefox Web browser.
If anyone in the Bitcoin community can pull that caliber of investment and talent together to launch new innovations in Bitcoin technology, it’s Back and Hill. In the cryptography hall-of-fame, Adam Back is second to only Bitcoin creator Satoshi Nakamoto: Back invented the Proof-of-Work algorithm, named Hashcash, that is one of the core components of Bitcoin tech. Back was also one of the first contributors to Bitcoin when it came online in early 2009.
Austin Hill also has a legacy in the world of cypherpunk. After selling his first internet company in the mid 1990’s, Hill started Zero-Knowledge Systems: the largest and most funded research company focused around cryptographic technologies for privacy, anonymity, and electronic cash. Hill has been an Angel Investor and VC for many startups and will act as CEO of Blockstream.
Sidechains will function as a mechanism for transferring bitcoins to a separate-but-connected blockchain through a process called “pegging”. This would allow the creation of alternative chains that use bitcoin but retain themselves as separate blockchains. These systems could potentially be utilized as custom chains for private use or testing purposes - a clear step forward in the technical evolution of bitcoin. This could also serve as a “firewall” of sorts for the primary Blockchain, which would secure Bitcoin even further.
The role of Blockstream and Sidechains will be more apparent when the technology is actually released. While there is no launch date for either technology or company, some sources say to watch out for Sidechains within the next year.