Bitcoin NG, or How Cornell Researchers Think a Radical Redesign Can Solve Bitcoin’s Scaling Issues

Bitcoin Magazine
Bitcoin NG, or How Cornell Researchers Think a Radical Redesign Can Solve Bitcoin’s Scaling Issues
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The block-size limit dispute, at its heart, represents a trade-off between efficiency and security. Bigger blocks allow for more transactions on the Bitcoin network but could reduce mining power utilization and lead to centralization. Engulfed in sometimes heated debates, several developers have submitted proposals to strike a right balance between the two and reach community consensus – but so far to no avail.

A group of Cornell University researchers, meanwhile, took an entirely different approach. Instead of attempting to strike the right balance, post-doctoral associate Ittay Eyal, doctoral student Adem Efe Gencer, computer science professor Emin Gün Sirer and research scientist Robbert Van Renesse, proposed Bitcoin NG, a radical redesign of the Bitcoin architecture meant to solve the block size trade-off entirely.

On key blocks

Currently, Bitcoin miners include two main types of data in blocks: a proof of work which allows the network to determine the longest chain, and a number of transactions to be selected by the miner. As its main differentiator, Bitcoin NG splits these two functions by creating two separate types of blocks: key blocks and microblocks, both of which are still part of the same chain.

Key blocks include the proof of work, a reference to the previous block, and the coinbase transaction (mining reward) – but none of the other transactions. In Bitcoin NG’s current design, and much like “normal” Bitcoin blocks, key blocks are found every 10 minutes on average. And, also like “normal” Bitcoin blocks, the amount of hashing power used to find the block determines the longest chain. In other words, it determines which blockchain is the real one.

To explain the benefits of using key blocks, Eyal told Bitcoin Magazine:

Since key blocks don’t include any transactions, they require very little data to be transmitted over the network. This results in faster block propagation, and, therefore, in fewer pruned blocks [‘orphans’]. As such, less mining power is wasted, and the incentive to centralize mining is reduced.”

On microblocks

Apart from the proof of work, a reference to the previous block, and the coinbase transaction, a miner includes one more type of data in a key block: his own public key. Subsequently, the corresponding private key is required to sign the other type of blocks: microblocks.

As opposed to key blocks, microblocks do not include any proof of work, but merely store transactions. These microblocks are created much more often: on average once every 10 seconds in Bitcoin NG’s initial design. As such, the miner of a key block is essentially in charge of confirming transactions on the network until a new key block is found.

On poison transactions

There is one problem. The fact that microblocks are not secured by proof of work, means a miner (the key block signer) could easily double spend a transaction; he can simply sign multiple microblocks with contradicting transactions to different entities at the same time.

Therefore, Bitcoin NG uses so-called “poison transactions.” If the network notices a double spend, a poison transaction is created, which destroys the revenue – the mining reward and fees – of the double spending miner retroactively. As such, miners are incentivized to remain honest.

Transactions included in a microblock on the Bitcoin NG blockchain would be much more reliable than unconfirmed transactions on the current Bitcoin blockchain,” says Eyal. “But microblocks would not offer the same level of security as key blocks. Only key blocks would offer a similar level of security as blocks on the current blockchain do, meaning it would still be wise to wait for several confirmations when the value of a transaction is significant.”

Radical

Compared to alternative proposals circulating that address the scaling issue. Bitcoin NG is probably the most radical redesign of the Bitcoin protocol as we know it today. By basically flipping the current process of Bitcoin mining on its head, the Cornell research team has proposed an alternative that is completely incompatible with the existing consensus rules. Whether Bitcoin NG actually has any type of future, therefore, remains to be seen.

There are several ways where this could go,” Eyal explained. “We could reach a consensus among the Bitcoin community to change the way the blockchain works, and implement Bitcoin NG to be the new Bitcoin. Or, if someone is inclined to implement all the technical differences, Bitcoin NG could become an altcoin. Personally, I’m interested in the technology and the science behind it, as a research project. I think this is a better way to do a blockchain.”

For more information on Bitcoin NG, see Eyal and Sirer’s blog post on Hacking, Distributed.

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Former Reddit Cryptocurrency Engineer Explains How His Decentralized, Bitcoin-Powered Social Media Platform Will Work
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The idea of a social media platform with Bitcoin-powered financial incentives has become rather popular ever since former Reddit Cryptocurrency Engineer Ryan X. Charles wrote about how Bitcoin could be used to solve some of Reddit’s core issues earlier this year.

Although many believed that this new social media application would be nothing more than a copy of Reddit with a few Bitcoin-centric features added to it, Charles recently told an audience at an SF Bitcoin Meetup that the final product could look quite different from the “Frontpage of the Internet.” Instead of an alternative to Reddit, it appears that Charles’s creation, Datt, will be a completely new kind of experience.

Bitcoin Attached to Upvotes

During his recent presentation, Charles displayed a few mockups of what Datt could look like when it’s ready for some sort of public release. The examples shown in his presentation slides looked quite similar to Reddit, but Charles noted that the functionality associated with upvoting and downvoting worked a bit differently:

This is an example of the front page. It looks similar to Reddit — you see links, you see images — with one difference being those little dots you can see on the left. When you press that dot, when you highlight the dot, that’s the same thing as like upvoting on Reddit, but you’re actually paying the person bitcoin. So, you’re giving them a little bitcoin tip. You can think of it — it’s sort of if ChangeTip were integrated to a website or if Zapchain looked like Reddit, it would look like this.

Features, Storage, and Onename Integration

Of course, Datt is not just about cloning Reddit and attaching bitcoin to upvotes. There will be other features added to the system, which could make the platform a bit more dynamic. For example, Charles noted that there could be some features that are similar to what is found on Twitter:

There will probably be following, like Twitter, so it won’t be exactly the same as Reddit.

Charles also wanted to make the point that a user does not need to have any bitcoin to use Datt:

You do not need to have bitcoin to do anything. That’s another question — people ask about this a lot . . . You don’t have to have bitcoin to view content or to post content. It’s sort of a feature, but you don’t have to have it.

With this being an open-source project with the promise of decentralization, it makes sense that user data and content will not be stored on a centralized server owned by Datt. Charles noted that IPFS or another P2P protocol where each user is able to store data related to the subreddits (or whatever Datt communities are called) they’re interested in could be used for storing content, while Onename will likely be used to solve the identity problem.

How Will Datt Be Monetized?

In addition to explaining how Datt will work as an application, Charles also spent some time discussing how a profitable business could be built around the platform. He sees monetization as a non-issue, and he thinks taking a cut of each transaction made on Datt could be a business model that works over the short term:

To me, this is a non-issue. I think it’s very obvious — we will just take a portion of payments. Almost no one is going to modify the client to take out that portion. It’s technically optional, but we’ll just take a cut of the payments. I think that will work; we’ll see.

Charles pointed to OB1 (the company behind OpenBazaar) as an example of an alternative business plan, but it’s clear that he will try monetize the protocol first:

There are other ways we could earn money. We could provide services [like what OB1 plans to do. OB1] is going to do more like creating other products and services, not so much monetizing the protocol. I’m trying to monetize the protocol. When people make payments on this thing, a cut goes to the company by default. At least, that’s the plan.

It’s still somewhat difficult to imagine what Datt will look like when it’s released to the public early next year, and an early prototype release in November could help Charles and the rest of the development team figure out which direction to move in next. Anyone interested in getting involved with the development process can visit the Datt GitHub page.

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Satoshi Nakamoto Nominated for the 2016 Nobel Prize in Economics

Bhagwan Chowdhry, a Professor of Finance at the University of California Los Angeles (UCLA) has nominated Satoshi Nakamoto for the 2016 Nobel Prize in Economics.

The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics. It is generally regarded as the most prestigious award for that field.

“The committee has invited me to nominate someone for the 2016 Prize,” writes Chowdhry in The Huffington Post. “I then started thinking whose ideas are likely to have a disruptive influence in the twenty first century. The name of the inventor of Bitcoin suddenly jumped up in my consciousness and I have not been able to get it out of my mind since then, Satoshi Nakamoto.”

Will Satoshi Nakamoto, the Inventor of #Bitcoin, Win the 2016 #NobelPrize in Economics? https://t.co/NhTErS6iM9

— Bitcoin Magazine (@BitcoinMagazine) November 9, 2015

“The invention of bitcoin – a digital currency – is nothing short of revolutionary,” continues Chowdhry. “[Bitcoin] is digital and exists purely as a mathematical object. It offers many advantages over both physical and paper currencies. It is secure, relying on almost unbreakable cryptographic code, can be divided into millions of smaller sub-units, and can be transferred securely and nearly instantaneously from one person to any other person in the world with access to internet bypassing governments, central banks and financial intermediaries such as Visa, Mastercard, Paypal or commercial banks eliminating time delays and transactions costs.”

Of course, Chowdhry is aware that the Nobel Committee is unlikely to accept the nomination of a pseudonymous candidate. That’s why the article’s title is “I (Shall Happily) Accept the 2016 Nobel Prize in Economics on Behalf of Satoshi Nakamoto.”

“There’s no real precedent for awarding the Nobel Prize to an unknown person (or possibly even group of people), so it’s difficult to say how the Prize committee will deal with the nomination,” notes Gizmodo. “But even so, the fact that Bitcoin and Nobel Prize in Economics are being talked about in the same breath is significant all on its own.”

“I would be happy to go and accept the Prize on [Nakamoto’s] behalf,” says Chowdhry. “What about the acceptance speech? That won’t be any problem either. He can write his speech, digitally sign it and send it to me securely. I would, of course, rehearse and deliver it on his behalf at the Prize ceremony.”

Even so, it still seems unlikely that the Nobel Committee will accept the nomination. But it’s interesting to imagine that Nakamoto could choose this moment to reveal his identity, which would force the Committee to accept his nomination and take it seriously. As Chowdhry notes, Satoshi is so rich that the financial reward wouldn’t matter much – he is still sitting on a huge stash of bitcoin that he could sell anytime – but the temptation of joining the very select club of Nobel Laureates is difficult to resist. If Satoshi ever chooses to disclose his identity, now seems like a very appropriate time.

That Satoshi Nakamoto deserves a Nobel Prize is difficult to deny. As Chowdhry notes, bitcoin as a currency and an efficient payment means is just the tip of the iceberg. The disruptively innovative nature of Bitcoin lies in the possibility of decentralized trustless agreements and digital contracts that can be digitized, securely verified and stored, and transferred instantaneously from one party to another.

“The implications of this are immense,” says Chowdhry, and adds that Bitcoin is likely to upend the role central banks play in conducting monetary policy. “The consumers will be big beneficiaries and indeed the poor and marginal sections of the society will reap the benefits of financial and social inclusion in the coming decades,” he says.

It’s interesting to note that Satoshi Nakamoto might have already received the Nobel Prize in Economics. In fact, the rumors that the unknown identity behind Satoshi could be the mathematician John Nash of A Beautiful Mind fame, who received the Nobel Prize in Economics in 1994, never quite died out. Nash, who openly proposed many ideas for next-generation economics that can be related to Bitcoin and considered as precursors, for example the Ideal Money concept, passed away in May 2015.

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