Drivechain is a Bitcoin improvement proposal that aims to scale Bitcoin and add new features using sidechains.

What Is Drivechain in Crypto?

Drivechain is a Bitcoin improvement proposal that aims to scale Bitcoin and add new features using sidechains. The Drivechain proposal, authored by Paul Sztorc, intends to drive innovation toward Bitcoin while avoiding changes to Bitcoin's core layer 1 design. Sidechains would be "pegged" to Bitcoin, allowing users to transfer Bitcoins between the main chain and sidechains.

Why Was Drivechain Proposed for Bitcoin? 

According to Sztorc, Bitcoin has experienced little innovation since its creation. Upgrades are difficult due to the challenges of changing Bitcoin's base layer. Drivechain could allow permissionless innovation on top of Bitcoin through sidechains that can fail safely without affecting layer 1. This would enable new features and functionality to be developed without core developers needing to change the Bitcoin protocol itself. Drivechain sidechains are envisioned to be an "opt-in" choice, so users who want to take advantage of new innovations could use sidechains while Bitcoin maximalists can stick to the main chain.

What Scaling Solution Does Drivechain Offer for Bitcoin?

Drivechain proposes scaling Bitcoin by moving transactions from the main chain to sidechains. These can have bigger blocks and onboard users directly, taking pressure off the layer 1. Having bigger blocks on sidechains avoids the contentious block size debate for the Bitcoin main chain. Users transact on the sidechains for efficiency and low fees, while still ultimately settling on the highly secure Bitcoin mainnet. This layer 2 model follows the same principle as the Lightning Network, moving volume off the chain while using the main chain as a secure settlement layer.

What Other Problems Could Drivechain Potentially Address? 

Drivechain could reduce contentious hard fork disputes by moving experiments to sidechains instead of changing layer 1. Without having to modify the main Bitcoin protocol, there is less risk of causing major disputes and splits in the community when adding new features. Drivechain could also support Bitcoin's security budget after the block reward declines by collecting fees from sidechains. As the block rewards diminish over time, transaction fees from high-volume sidechains could replace this revenue source.

How Does the Drivechain Implementation Work?

The Drivechain implementation has two key parts - hashrate escrows using blind merged mining to secure sidechains, and new blockchain messages to manage sidechain creation/destruction and transfer funds between sidechains and layer 1.

Hashrate escrows use Bitcoin's mining power to arbitrate sidechain disputes, while blind merged mining lets Bitcoin miners secure sidechains without running full sidechain nodes. The new blockchain messages move assets between chains.

Drivechain requires six new blockchain messages to create/destroy sidechains, bridge Bitcoin to sidechains, and return funds from sidechains to the parent chain. These novel message types enable the two-way transfer of Bitcoins between both the chains. They facilitate the locking and unlocking of funds on each blockchain.

How Does Drivechain Use Blind Merged Mining for Security?

Blind merged mining allows Bitcoin miners to secure sidechains without running sidechain software. Miners include proof in Bitcoin blocks to show they mined a sidechain block, earning sidechain fees in Bitcoin. This avoids fragmentation of mining power across multiple chains. Even without validating sidechain transactions, miners can attest to valid sidechain blocks, preventing double-spends

What Benefits Could Drivechain Offer Bitcoin?

Drivechain moves experiments off layer 1 onto sidechains. This avoids contentious layer 1 changes and hard fork disputes that have created disputes over Bitcoin upgrades. Controversial proposals like increased block sizes or privacy features can be tried on sidechains first rather than directly modifying the parent chain. This prevents network splits and loss of network effect.

Moreover, since sidechains don't modify layer 1, bugs or failures are isolated from the Bitcoin base layer. This reduces attack vectors from code changes. Bitcoin remains simple and robust, avoiding new risks from untested sidechain innovations. Failed experiments don't put the main chain at risk.

Drivechain sidechains also assist with scalability as they can have larger blocks, higher throughput, and direct onboarding to scale transaction capacity without impacting layer 1. Bitcoin can scale "infinitely" using sidechains while keeping its own base unmodified. This avoids centralization and security trade-offs that come with main chain scaling.

In addition to these, Drivechain allows new Bitcoin features to be developed permissionlessly on sidechains. These could include smart contracts, higher privacy, additional assets, prediction markets, etc. Almost any major crypto innovation could be implemented safely as a sidechain, benefiting Bitcoin with new capabilities without danger to the base protocol.

What Are the Main Critiques Against Drivechain?

Some argue that Drivechain allows miners to steal sidechain funds. With 51% of hash rate, miners could withdraw BTC from sidechains that they did not deposit. This "miner extractable value" critique suggests sidechain assets are less secure than native BTC unless the whole mining industry is trusted.

Opponents believe blind merged mining incentivizes Bitcoin miners to participate in sidechains they don't validate fully. This could further centralize mining in a few mega-pools that can handle multiple chains. Small independent miners may be pushed out, and forced to rely on larger pooling operators.  Critics also argue the complexity of Drivechain and sidechains may have unintended impacts, like new attack vectors. There are fears about scam risks, such as fake sidechains designed to steal users' funds. The more complex Bitcoin's ecosystem grows, the more edge cases and vulnerabilities may emerge.