Side Chain

When sending funds to a specially formed Bitcoin address, the funds are then out of the sender’s control and completely immobilized. Once the immobilization transaction is sufficiently confirmed by the network, a message is sent to the Side Chain, containing:

  • Proof that the funds were sent to that special address on the Bitcoin network
  • Confirmation they are therefore immobilized
  • Confirmation that the sender was the one who did it

The Side Chain then creates the appropriate number of tokens on its own network and gives the sender control of them, allowing the sender to transact with those funds on the pegged chain under whatever rules that chain chooses to implement.