Bitcoin, schmitcoin. Let's play piggyback on the blockchain

Cryptocash isn't cool any more – and its core mechanism is being hijacked

Distributed compute and user buy-in

Flavien Charlon, founder of coloured coin rival CoinPrism, also uses OP_RETURN. The bloat problem isn’t as bad as people think, he argues.

“We use about 20 bytes per transaction, so it’s a really small amount of data,” Charlon said, adding that in its entire history, his system has taken up just a few hundred kilobytes on the blockchain.

He argues another point: customers will pay for it anyway. Whenever someone sends a Bitcoin transaction, they can include a transaction fee that persuades the miners to include it in their list of transactions to hash. It’s effectively an exchange of digital currency for computing power.

“I’m of the opinion that as long as someone pays for the transaction at the price that the market is willing to mine it, then people should be able to put that transaction in the blockchain,” he said.

There are probems with these points, though. Coloured coins have been even more niche than Bitcoin as an application right now. If they take off as much as Greenspan and Charlon would like, then they would become a far larger part of the blockchain’s data.

Secondly, transaction fees aren’t that relevant right now. The Bitcoin network awards a reward of 25 Bitcoins every ten minutes or so to the miner who successfully solves a constantly-changing mathematical puzzle and hashes the current transactions. That, rather than the small transaction fees, is the key motivation for mining Bitcoins. The block reward is set to halve in value at set intervals, meaning that transaction fees will become more important in the future, but this will be a slow process.

In any case, the Bitcoin blockchain will continue to be a battlefield as purists duke it out with developers wanting a free (or at least very cheap) ride on others’ work. Can the two co-exist happily together?

One approach is to use a concept called sidechains. These enable Bitcoins to be transferred from the Bitcoin blockchain to someone else’s blockchain, and used as assets there. They can then be transferred back when the user wants. This, at least, takes advantage of Bitcoin’s cryptographic security, without smearing other people’s transactions all over Bitcoin’s blockchain.

The problem with this is interoperability. The most elegant way to implement a sidechain would need a fundamental change to the Bitcoin protocol, but many core developers are notoriously conservative. Blocksteam, the company behind the sidechain approach, now appears to have gone with another option, in which a handful of miners change the way that they mine. Notwithstanding the difficulties, this approach is generating some interest among investors. In November, sidechain startup Blockstream scooped $21m in funding from LinkedIn's Reid Hoffman, Khosla Ventures, Eric Schmidt’s VC firm Innovation Endeavors, Lotus Notes creator Ray Ozzie, and AME Cloud Ventures (that VC firm is owned by Jerry Yang, who founded Yahoo).

Whether it’s by increasing the blockchain size or by using sidechains, one way or another something has to change. Cryptocurrency watchers from venture capitalists through to software scientists have been saying that the real potential for Bitcoin lies in the blockchain. It would be a shame to break it. ®

Similar topics

Broader topics

Other stories you might like

  • Dog forgets all about risk of drowning in a marsh as soon as drone dangles a sausage

    It's not the wurst idea in the world

    Man's best friend, though far from the dumbest animal, isn't that smart either. And if there's one sure-fire way to get a dog moving, it's the promise of a snack.

    In another fine example of drones being used as a force for good, this week a dog was rescued from mudflats in Hampshire on the south coast of England because it realised that chasing a sausage dangling from a UAV would be a preferable outcome to drowning as the tide rose.

    Or rather the tantalising treat overrode any instinct the pet had to avoid the incoming water.

    Continue reading
  • Almost there: James Webb Space Telescope frees its mirrors and prepares for insertion

    Freed of launch restraints, mirror segments can waggle at will

    NASA scientists have deployed mirrors on the James Webb Space Telescope ahead of a critical thruster firing on Monday.

    With less than 50,000km to go until the spacecraft reaches its L2 orbit, the segments that make up the primary mirror of the James Webb Space Telescope (JWST) are ready for alignment. The team carefully moved all 132 actuators lurking on the back of the primary mirror segments and secondary mirror, driving the former 12.5mm away from the telescope structure.

    Continue reading
  • Arm rages against the insecure chip machine with new Morello architecture

    Prototypes now available for testing

    Arm has made available for testing prototypes of its Morello architecture, aimed at bringing features into the design of CPUs that provide greater robustness and make them resistant to certain attack vectors. If it performs as expected, it will likely become a fundamental part of future processor designs.

    The Morello programme involves Arm collaborating with the University of Cambridge and others in tech to develop a processor architecture that is intended to be fundamentally more secure. Morello prototype boards are now being released for testing by developers and security specialists, based on a prototype system-on-chip (SoC) that Arm has built.

    Arm said that the limited-edition evaluation boards are based on the Morello prototype architecture embedded into an Armv8.2-A processor. This is an adaptation of the architecture in the Arm Neoverse N1 design aimed at data centre workloads.

    Continue reading

Biting the hand that feeds IT © 1998–2022