Since so many people talk about trustless crosschain, can anyone of you gurus explain to me how that worksbfor reclaiming BTC (on the bitxoin blockchain) back from the corresponding *BTC counterparty?
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The discussion with the other day touches on this- projectserum.com/serum_white_pa or like how Ren and Thorchain do it now is a number of VMs who are party to the funds in a multisig who send btc when told to. No custodian. Suggest digging into the docs when you have time :)
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BTC is tricky because there aren't any smart contracts but basically what you do for a BTC <> ETH swap is:
1) both post some collateral in ETH
2) BTC party delivers
3) if they do, ETH sends
4) if not, ETH doesn't send and instead siezes collateral
using block history proofs
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A collateralized atomic crosschain swap, so to speak. That way, all you need is a way to validate a bitcoin tx on ethereum (e.g. via SPV). Works forbme, but is quick capital intensive.
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Yup that's basically right. It's not _super_ cap intensive--maybe requires another 5% or so locked up during the transaction.
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There's a problem tho. Who's in control of supply and how/when are new tokens issues for BTC on the other chain? What's happening on a 'deposit' of x BTC? The very initial step. It's easy to swap assets if there is supply on both chains, but how to get there?
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Oh yeah it's really hard to tokenize BTC well; swapping BTC works better.
For a tokenization idea see "SerumBTC" here: projectserum.com/serum_white_pa