This week, the Statechain Bitcoin concept reemerged in the market in a major way. Statechains work as a system that allows users to send their private keys, rather than actual Bitcoin. Since sending private keys is free and instant, the Statechain project has some serious potential to revolutionize the space.
The Statechain concept isn’t a new one. In fact, the concept first appeared in October 2018. At that time, an ingenuitive developer by the name Ruben Somsen described the concept to a packed room at a Tokyo Bitcoin conference. Originally, the concept caught the attention and imagination of the cryptospace. However, the project was never implemented because, at the time, developers deemed it impossible due to technical restrictions inherent in the Bitcoin blockchain.
What is Statechain?
Statechains allow users to bypass transaction times and costs by sending each other private keys instead of transferring Bitcoin between wallets. In essence, the concept is simple, you load a wallet with the proper amount of Bitcoin to complete your transaction. Then you send the private keys over to your recipient.
Of course, this system does have some glaring security gaps that needed to be rectified before it can go live. For one, if you send your keys to an individual, you still retain access to the funds. This might work for trusted transactions, but the reality is, some people would keep a copy of that key. This would leave the recipient with compromised security. It wasn’t until this week that this issue began to see resolution.
Luckily, Tom Trevethan, CTO of blockchain company Commerce Block believes his team has figured out a way to make this type of transaction more secure. First, his team modified the concept slightly. In Trevethan’s version, a neutral third party is brought into the transaction.
This third-party would function as a moderator to the transaction. Basically, once you handover over the private keys of your Statechain Bitcoin wallet, the platform operates in a manner that only the recipient has access to a new private key. Importantly, the transaction requires the sender and the neutral party to give the transaction the go-ahead before keys transfer.
Interestingly, Trevethan hasn’t fully-developed how the transaction would process. Consequently, he posted on the Bitcoin developer mailing list this week. The post explained his concept and asked fellow developers to provide some feedback and suggestions on the Statechain concept.
Lighten Things Up
Importantly, Trevethan stated that the new system would function directly with the Lightning Network. This off-chain protocol reduces the costs of sending transactions via private payment channels. On top of reduced transaction speeds and costs, the protocol enables Bitcoin to conduct a host of new functionalities. It’s these functionalities that could enable the Statechain concept to become a reality once and for all.
Statechains are Coming
If Trevethan is able to figure out the finer details of the Statechain strategy, he may unlock the doors for free and instant Bitcoin transactions. For now, the idea is one that developers are watching carefully. Hopefully, in the coming weeks, a working Beta will release to the public. For now, Somsen and Trevethan may have the keys to change the game.