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From: vjudeu@gazeta.pl
To: "bitcoin-dev@lists.linuxfoundation.org"
 <bitcoin-dev@lists.linuxfoundation.org>,
 "truthcoin@gmail.com" <truthcoin@gmail.com>
Date: Sat, 04 Jun 2022 17:33:43 +0200
Message-Id: <162963804-b06af81ec3655f4e1950de9136310c7a@pmq3v.m5r2.onet>
Subject: [bitcoin-dev] Using Merged Mining on a separate zero supply chain,
 instead of sidechains
Precedence: list

Some people think that sidechains are good. But to put them into some worki=
ng solution, people think that some kind of soft-fork is needed. However, i=
t seems that it can be done in a no-fork way, here is how to make it permis=
sionless, and introduce them without any forks.

First, we should make a new chain that has zero coins. When the coin supply=
 is zero, it can be guaranteed that this chain is not generating any coins =
out of thin air. Then, all that is needed, is to introduce coins to this ch=
ain, just by signing a transaction from other chains, for example Bitcoin. =
In this way, people can make signatures in a signet way, just to sign their=
 transaction output of any type, without moving real coins on the original =
chain.

Then, all that is needed, is to make a way to withdraw the coins. It could =
be done by publishing the transaction from the original chain. It can be co=
py-pasted to our chain, and can be used to destroy coins that were produced=
 earlier. In this way, our Merge-Mined chain has zero supply, and can only =
temporary store some coins from other chains.

Creating and destroying coins from other chains is enough to make a test ne=
twork. To make it independent, one more thing is needed, to get a mainnet s=
olution: moving coins inside that chain. When it comes to that, the only li=
mitation is the locking script. Normally, it is locked to some public key, =
then by forming a signature, it is possible to move coins somewhere else. I=
n the Lightning Network, it is solved by forming 2-of-2 multisig, then coin=
s can be moved by changing closing transactions.

But there is another option: transaction joining. So, if we have a chain of=
 transactions: A->B->C->...->Z, then if transaction joining is possible, it=
 can be transformed into A->Z transaction. After adding that missing piece,=
 sidechains can be enabled.

However, I mentioned before that this solution would require no forks. It c=
ould, if we consider using Homomorphic Encryption. Then, it is possible to =
add new features, without touching consensus. For example, by using Homomor=
phic Encryption, it is possible to execute 2-of-2 multisig on some P2PK out=
put. That means, more things are possible, because if we can encrypt things=
, then operate on encrypted data, and later decrypt it (and broadcast to th=
e network), then it can open a lot of new possible upgrades, that will be t=
otally permissionless and unstoppable.

So, to sum up: by adding transaction joining in a homomorphic-encryption-wa=
y, it may be possible to introduce sidechains in a no-fork way, no matter i=
f people wants that or not. Also, it is possible to add the hash of our cha=
in to the signature inside a Bitcoin transaction, then all data from the "z=
ero supply chain" can be committed to the Bitcoin blockchain, that would pr=
event overwriting history. Also, Merged Mining could be used to reward side=
chain miners, so they will be rewarded inside the sidechain.