BTC In Sidechains: Here Is How Much Bitcoin Is Locked Up

Around $77 million of Bitcoin (BTC) is currently unavailable to use on the network, the latest Bitcoin news show. The real reason is not because it is lost but because that amount of Bitcoin (BTC) is locked up in sidechains. The BTC in sidechains information comes from data from block explorers which confirms that as of October 17, a total of 9,661 BTC ($76.96 million) or a tiny 0.054% of today’s Bitcoin supply resides in three major sidechain projects.

For those of you who never heard about BTC in sidechains, a sidechain is basically a separate blockchain tied to a cryptocurrency and its regular blockchain known as mainchain. Users can interact with it via a pegging mechanism – they will send funds to and from the sidechain with the security features ensuring that the coins are not available on both chains at once.

The two-way peg enables interchangeability of assets at a predetermined rate between the parent blockchain and the sidechain. The original blockchain is usually referred to as the ‘main chain’ while all additional blockchains are referred to as ‘sidechains’.

We have featured sidechains in the crypto news before. In fact, they have existed for several years and have various functions that depend on the developers’ aims. The Blockstream Liquid sidechain, known as LBTC, for example, focuses on the interexchange operability while giving traders improved features that are not yet available on the Bitcoin mainchain.

Liquid, which launched in October 2018, is right now including a modest 89 BTC ($709,700). This figure is currently dwarfed by the largest sidechain, Binance Chain, which has 9,001 in BTC (around $71.4 million).

The BTC in sidechains is popular right now – and even the Wrapped Bitcoin (WBTC) sidechain which is in fact an Ethereum-based ERC20 standard token has around 571 BTC worth $4.55 million – which is again, more than Liquid.

WBTC debuted in January 2019, while Binance Chain (which is the in-house crypto project by Binance) got its mainnet unveiling in April this year.

This week, we saw the wallet provider Blockchain and the digital asset manager CoinShares launching a Bitcoin sidechain of their own in the form of a gold token network.

Currently, BTC in sidechains is part of several popular sidechain platforms including RSK (Rootstock) and Ardor’s Blockchain.