What Are Bitcoin Drivechains? A Beginner's Guide

Bitcoin drivechains are one of the most debated Bitcoin scaling proposals that aim to bring more use cases to the most popular cryptocurrency network. However, as it might also introduce new risks, the Bitcoin community hasn’t reached consensus on this matter yet. 

In this guide, you’ll learn more about what drivechains are, how they work, and what risks they could potentially introduce to the Bitcoin network.

What Are Drivechains in Bitcoin?

Bitcoin drivechains are essentially sidechains, or independent blockchains, that run in parallel to Bitcoin. This idea was introduced by Bitcoin researcher Paul Sztorc via two Bitcoin Improvement Proposals (BIPs), 300 and 301. 

Drivechains would allow indirect use of BTC in this sidechain via a two-way peg while using the Bitcoin blockchain as the settlement layer, effectively inheriting its security and decentralization.

In theory, drivechains could be used to launch altcoins, NFTs, and other tokens, including stablecoins, and expand Bitcoin DeFi use cases while also helping Bitcoin miners collect extra revenues.  

Contrary to many popular Bitcoin Layer 2s (L2s), the implementation of drivechains would require a soft fork, which is another reason why it’s such a huge topic of debate within the Bitcoin community.

How Does the Drivechain Protocol Work?

There are four main components in drivechain technology that set it apart from similar solutions like traditional sidechains that power other Bitcoin L2s.

Pegging to Bitcoin

Drivechains allow the use of BTC between the mainnet and a sidechain via a two-way peg. It means that BTC is sent to a special contract, controlled by Bitcoin miners that are also using their hash power to secure the particular sidechain. 

When BTC is locked, the sidechain releases a corresponding number of native sidechain tokens. What’s more, these tokens can be designed to have specific features, such as stronger privacy. 

To get your BTC back, the sidechain executes a special withdrawal transaction, which we’ll explain in more detail below. 

Hashrate Escrow

BIP 300 describes “hashrate escrow” as a method of extending the withdrawal time for transactions moving from the drivechain to the mainnet for up to six months, as miners are tasked to ensure that risks associated with theft, double-spending, and transaction reversal are minimized to virtually zero. Also, withdrawals are done via "bundles" as separate requests are bundled into a single transaction.

In other words, you’d be able to deposit your BTC to a drivechain quickly, but withdrawals would be delayed for months, depending on how long it takes for the drivechain to achieve the required consensus for withdrawal finality. This would be decided through a voting system requiring a miner quorum in order to ensure that everyone is working together for the best interest of the network.

Blind Merged Mining

Blind merged mining is presented in BIP 301, which explains how miners can secure drivechains without having to run drivechain nodes. This is where the “blind” term comes from, as miners secure the drivechain without “looking.” 

This means that in practice, Bitcoin nodes don’t have to run drivechain nodes and vice versa. Instead, the drivechain node can send requests to the mainnet to add its block to its own blockchain, while sharing the transaction fee reward with the miner who accepts.

New Blockchain Messages

A total of six new blockchain messages were introduced in BIP 300 to handle everything relating to the creation, existence, and functioning of the drivechains, as well as depositing and withdrawing BTC. The messages are:

• M1: “Propose New Sidechain”
• M2: “ACK Proposal” (ACK meaning agreed or accepted)
• M3: “Propose Bundle”
• M4: “ACK Bundle”
• M5: Deposit -- a transfer of BTC from-main-to-side
• M6: Withdrawal -- a transfer of BTC from-side-to-main.

What Are the Benefits & Drawbacks of Drivechains?

Drivechains have generated a lot of conversation around their possibilities and potential setbacks. However, these debates are highly technical, with multiple rebuttals, and there is no clear consensus in the Bitcoin community, especially when it comes to the possible drawbacks. 

Here’s what the market is debating about:

Potential Benefits

• New use cases: Drivechains could help the Bitcoin ecosystem grow in multiple directions, such as DeFi, Bitcoin-powered altcoins, and more, without clogging the Bitcoin blockchain.
• Reduced risks of building on Bitcoin: Drivechains would allow experimenting with new use cases without affecting the Bitcoin blockchain.
• Additional revenues for miners: Blind merge mining could bring more revenues for Bitcoin miners.
• Increased competitiveness with altcoins: Drivechains could make altcoins on other chains obsolete, as these coins with the same features could be launched on a drivechain that leverages the security of the most decentralized blockchain.

Potential Drawbacks

• Complexity: Drivechain implementation could add new layers of complexity, with new potential attack vectors that the Bitcoin industry may not be able to anticipate.
• Mining-related risks: These are the most debated issues, as some Bitcoiners claim that miners could potentially steal funds during a BTC withdrawal, while they can also be incentivized to focus more on sidechains, potentially introducing new risks to the main network and its users. However, drivechain advocates keep rebutting these claims. 

The Takeaway

Drivechains are an ambitious proposal that could fundamentally change Bitcoin and the whole crypto space if implemented. However, the multi-year debate is still ongoing, as the community is trying to figure out all the possible risks and how they can be mitigated. As implementing drivechains would require a Bitcoin soft fork, this proposal needs to garner substantial support to be accepted. 

In either case, regardless of whether or not drivechains are implemented, they’ll certainly have been the driving factor behind a lot of important analysis and research.

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FAQs

What are some potential use cases for drivechain sidechains?

Drivechains could be used to expand the whole Bitcoin ecosystem by, for example, launching new tokens. It could be just regular altcoins, or NFTs, and even stablecoins. Moreover, drivechains could help expand the Bitcoin DeFi space and experiment even further.

How does drivechain maintain security?

Drivechains are secured by the same computational power as the Bitcoin network via Blind Merge Mining. Additionally, drivechains are designed with hashrate escrow in mind, which means that BTC withdrawals can take months in order to minimize the risk of fraud.

Are there any risks associated with drivechain?

Yes, there are a few different risks associated with drivechains, mostly related to the additional complexity of the system. For example, some argue that miners can steal BTC during the withdrawal process. Others are afraid that Bitcoin miners might focus more on sidechain mining, hurting the security of the main blockchain. However, as the debate is still ongoing, there’s no clear consensus on how probable these risks are. 

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