Extension Blocks

• Another idea similar to the concept of sidechains is called extension blocks. Much like sidechains, extension blocks allow users to opt-in to blocks of transactions with different validation rules.
• The key difference between a traditional sidechain and an extension block is that upgraded Bitcoin full nodes validate the transactions on the extension block. This means that the extension block is tied much more closely to the main Bitcoin network than a traditional sidechain. The level of separation between extension blocks and the Bitcoin network is almost non-existent, which means issues on extension blocks are more likely to cause issues for the entire Bitcoin network.
• With sidechains, there is a layer of separation between two blockchains, which means the main chain can be protected from issues on the sidechain. For this reason, it’s likely that more experimental ventures, such as RSK, will be implemented as a sidechain rather than extension blocks.
• Bitcoin Core contributor Johnson Lau posted an early version of a BIP draft for effectively increasing Bitcoin’s block size limit through the use of extension blocks.
• Since extension blocks can be implemented via soft forks, the features of the extension blocks are essentially opt-in for users. Even in the case of extension blocks with a larger block size limit, users are not forced to upgrade and validate or propagate blocks that are much larger in size. Those who wish 1MB blocks can continue to do so, while those who would like larger block size limits can do so on an opt-in basis.

Although users are able to opt-in to extension blocks, miners must upgrade to continue mining valid blocks on the main chain.