Why Bitcoin's base layer can't be scaled?
Apr 04, 2018 Posted / 619 Views
While the Bitcoin community disputed all the way through 2017 regarding how to scale a network hit by high fees, a group of miners as well as developers decided to take issue into their own hands by forking BTC as well as boosting the block size of Bitcoin, producing Bitcoin Cash.
Why would increasing block size be the correct way to scale the Bitcoin system?
When new miners join the Bitcoin network, one may think the added processing power would boost transaction speed however this isn’t so, because other miners only add to the network’s security. In actual fact, BTC’s transaction processing rate is a function of the system’s settings for block size plus block creation rate, both of which are determined by community.
Here we’ll look at why transaction speed can’t be scaled using these levers devoid of increasing vulnerability to double-spend attacks.
One of Bitcoin’s core security assumptions is restricted network delays
In Bitcoin’s white paper, a few essential assumptions guarantee the network’s security:
· Users keep a copy of the blockchain, and updates are handled for sincere users by always updating to the longest chain they are aware of.
· Miners crack proof-of-work puzzles to include blocks onto existing chains, as well as block additions are handled for sincere miners by always adding to the longest chain they are aware of.
· When there are limited network delays as well as honest participants control >50% of the network’s whole computational power, the longest chain will be controlled by honest participants and will develop faster than attackers’ alternate chains
In real-world conditions when there are at least a few network delays, we’ll talk about how more and more large block sizes as well as faster block creation rates lead to more forking, which reduce the security of the network.
Security means stopping double spend attacks
When security is conferred in the milieu of Bitcoin, we are referring to the capability to prevent double spend attacks.
There are two stages to getting a transaction finished on the Bitcoin network where User A needs to access their Bitcoin wallet to state they are sending money to User B, as well as the network recognizes this transaction plus adds it to the permanent record on the longest chain.
What is double spend attack?
It involves an attacker first issuing a transaction on the existing longest chain, and then using their computing power to make an alternate longer chain that does not comprise that original transaction.
Bitcoin’s block creation rate and block size can be changed easily…
When we chat about Bitcoin scalability, it’s significant to note that both the block creation speed, which determines the confirmation speed of transactions, as well as the individual block size are determined by the network. Remarkably adding extra computing power will make the network extra secure against attackers, but does not directly result in more transactions being processed.
As (# of transactions processed / second) = (# of blocks created / second) * (transactions per block), Bitcoin scalability is really something the community can in fact put if agreed upon.
So why can’t Bitcoin only scale by increasing block creation rate as well as block size?
… But only at the cost of security?
This is for the reason that increasing either of these variables decreases the network’s security threshold.
Security threshold = % of the network’s processing power required to run a double spend attack.
Does block size and block creation rate have an effect on forking?
Increasing the block size makes it dawdling for new blocks to be corresponded all through the network. This is like the effect of slowing down network speeds, in that new blocks as well as longest chains take longer to spread across the network, boosting the frequency of forks. The impact of block creation rate is also comparable ; the more rapidly new blocks are being produced, the more frequently the longest chain is growing, and the more frequently nodes will discover themselves wasting blocks by functioning on top of out-of-date, short chains.
While adding extra mining power to the network makes Bitcoin safer, couldn’t you then boost block size or creation rate to boost transactions processed, while still keeping security unvarying?
This may work in theory, but perhaps isn’t the long-standing answer for Bitcoin, since Bitcoin would require to scale by orders of size more before it became aggressive with other centralized solutions supposing the aim is to turn out to be a method for daily payments.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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