24. September 2023

Developers secured RSK’s sidedchain by using bitcoin hashreite.

IOVlabs, a developer of the RSK sidechain, changed the way bitcoins are exchanged for the tokenized version of the first rBTC crypt currency. The new system is called Powpeg and uses a bitcoin network hash rate directly as security, reports Bitcoin Magazine.

The Bitcoin Bitcoin Sidechains are alternative blocklocks with tokens tied to the cryptocurrency in a 1:1 ratio. They may use different protocol rules. RSK’s Sidechein uses a large part of the Ethereum network rules, including full Turing smart contracts.

The rBTC tokens are extracted using combined mining, and today almost all of the largest mining pools are involved in this process. Using existing computing power, they produce RSK Side Chain Blocks, which are rewarded with transaction fees.

To issue rBTCs, the real bitcoins are sent to a multi-subscribed address controlled by 12 parties, after which an equivalent amount of rBTCs is issued using a smart contract. You can release the bitcoins by sending the corresponding number of rBTC coins to the address.

The keys to the multi-subscribed addresses are held by a „federation“ of industry representatives, originally consisting of 24 companies. However, technically they may have conspired to steal money from the address to which they have the keys.

The new system involves a wider group of key holders (Pegnatories) and automates the process with PowHSM, special hardware security modules.

Now that users send the bitcoins to a multi-signed wallet, they generate proof of the transaction and send it to the PowHSM. Once they have received the proof, the modules transfer the rBTC to the respective user.


As before, it will only be possible to release the bitcoins after the corresponding number of rBTCs has been sent to the address, but now after 4000 confirmations in the RSK network (about 200 confirmations in the bitcoin block). The PowHSM modules will also monitor compliance with this rule (RSK Simplified Payment Verification).

As stated by Sergio Lerner, co-founder of RSK and IOVlabs Director of Innovation, the unique Powpeg system, which he also calls „vetoocracy“, is very important, as a decentralised financial system must be based on exceptional security.

Recall that RSK’s core network has been in operation since January 2018. Sidechein supports all types of Ethereum transactions and smart contracts. And given the growing popularity of the decentralised finance sector, IOVlabs hopes that DeFi services will also be available via RSK in the bitcoin network.