Ciphrex CEO and Bitcoin Core Contributor Eric Lombrozo gave what was perhaps the most in-depth talk at the recent Blockchain Agenda Conference in San Diego. While most of the other presentations and panel discussions focused on topics such as regulation and disruption of traditional financial institutions, Lombrozo’s talk mainly focused on the technical side of things. In particular, the highly-experienced information security specialist spoke about the possibilities for scaling Bitcoin to many more users in the near future.
During his presentation, Lombrozo covered three key options for scalability that could eventually allow the network to handle much wider adoption of the digital cash system. Although all of the attention has been on a potential increase in the block-size limit over the past year, Lombrozo did not discuss this potential change to the Bitcoin protocol.
More Efficient Cryptographic Proofs
Cryptographic proofs are not something usually discussed in the wider Bitcoin community, but Lombrozo believes that finding more efficient methods of proving some piece of knowledge via cryptography could be helpful for scalability. He explained:
“We need to think in terms of scripting systems which are optimized for efficient proofs. A lot of the computational problems are not really easily amenable to this kind of stuff, but luckily, a lot of the kinds of problems we’re interested in for these kinds of things do offer efficient proofs, which means it’s much easier to verify the proof than to construct the proof.”
It’s possible that this option for creating a more efficient Bitcoin network is not often discussed because it is quite technical, but MIT’s Madars Virza gave a talk on the topic at Scaling Bitcoin Hong Kong. In his talk, Virza talked about the role of zero-knowledge proofs for Bitcoin scalability.
In Lombrozo’s presentation, he noted that some of the new breakthroughs in cryptography still need some time before it would make sense to incorporate them into Bitcoin:
“Some of the more cutting-edge crypto stuff, like zk-SNARKs, are still too fresh to apply to these financial networks, but there are potential ways in which we could generalize them to solve all kinds of different problems.”
Zerocash, a system for truly anonymous digital payments, leverages zk-SNARKs to fix many of the privacy issues in Bitcoin.
More Options for Transaction Validation
Another opportunity for better Bitcoin scalability comes in the form of more options for transaction validation. Lombrozo explained that not every transaction needs to be completely validated before someone may feel comfortable with accepting it as real:
“Since it doesn’t make sense to have every single node validate every single transaction by every single other node (because this will never scale), we need to have a way to have more of a spectrum where we can allow nodes to have partial validation where they may not be 100 percent sure, but if they’re 99.999 percent sure that things are correct, then it can cut down on a lot of the validation costs. That might be worth it.”
An often-used example here is that one’s purchase of a morning coffee at Starbucks doesn’t necessarily need to be broadcast and validated by every Bitcoin node in the world.
Lombrozo also added that opt-in models for trusting others could also be useful:
“We can have opt-in trust models where you could trust a server with the task of validation, but you choose to do that. It’s not something where you’re forced to do it.”
The key point here is simply giving users more options when it comes to transaction validation. If less validation is needed on a particular transaction, then accepting a lower trust model can help unclog blocks.
Off-Chain Protocols
The third way to scale Bitcoin discussed by Lombrozo was off-chain protocols. These are the sorts of options that take transactions off the blockchain and onto federated servers or other low-trust networks. Lombrozo seemed extremely bullish on this option for scaling Bitcoin during his talk. He stated:
“One of the most exciting developments this year is the development of off-chain protocols. I think this is one of the most exciting areas that we’ve seen. I think this is probably the most interesting development that has occurred since Bitcoin was created.”
Examples of off-chain bitcoin transactions include: transactions between Coinbase users, the Lightning Network, Open Transactions, and micropayment channels (best illustration being Streamium).
Although the focus of Bitcoin’s scalability debate is still on the block-size limit right now, it’s clear there are still many options out there to consider. Bitcoin Core and the increasingly-popular Bitcoin Classic will both continue to make cases for their scalability solutions in the coming months.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.