ConsenSys announces the release of BTC Relay to connect Bitcoin and Ethereum

The ConsenSys team announced the official launch of BTC Relay, which is considered the first sidechain. BTC Relay will connect the Ethereum network with the Bitcoin network in a secure and decentralized way. BTC Relay allows users to verify Bitcoin transactions on the Ethereum blockchain by using Ethereum's smart contract function.

The main idea behind sidechains is a mechanism that allows users to send transactions not only to other addresses or accounts, but also to other blockchains. This simple idea has been appreciated by Bitcoin developers and community members before. Instead of using a centralized server (such as a cryptocurrency exchange) to obtain tokens of a particular blockchain, you can simply send Bitcoins to an address and have them automatically and securely converted into tokens of that blockchain.

BTC Relay is an open source project that allows the Ethereum network to connect with the Bitcoin network. BTC Rely is a smart contract based on the Ethereum blockchain. ConsenSys also announced that BTC Relay will be added to the decentralized exchange EtherEx.

ConsenSys also plans to launch an Ethereum-based Bitcoin token, or ETHBTC, which can be done by locking Bitcoin in a multi-signature wallet. BTC Relay relies on a group of community members called Relayers who run a software that transmits data from the Bitcoin network blocks to the BTC Relay platform. Ethereum decentralized applications (Dapps) can then query Relay's smart contracts to verify activity on the Bitcoin network.

The BTC Relay project was born and grew under the Ethereum Foundation, but when BTC Relay creator Joseph Chow joined ConsenSys, BTC Relay also moved to ConsenSys. Wanxiang Blockchain Labs funded Chow’s project development, and the funds were used for independent security audits of the platform.

Ethereum co-founder Vitalik Buterin said:

“It’s great to see BTC Relay deliver the first-ever cross-blockchain communication product. Hopefully it will be a model for cross-blockchain application interoperability, whether it’s between Bitcoin and Ethereum, other blockchains and Ethereum, or between public, private, or federated chains.”

The Ethereum ecosystem continues to grow. Many members of the cryptocurrency community see Ethereum as a competitor to Bitcoin, but in fact, the two can complement each other. In the future, users may be able to use Bitcoin to rent the computing power provided by the Ethereum Virtual Machine, or safely use Ether to pay for services priced in Bitcoin.