How to fix a problem like Bitcoin scaling?

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Those who have been in the crypto realm for more than five minutes will no doubt have encountered speeches about the Bitcoin scaling problem.

The limited capacity offered by the default 1MB block size on the Bitcoin network has been the subject of an ongoing debate, with disagreements over how best to scale the network to allow Bitcoin to become an element. fundamental to our global financial and payments infrastructure.

The most publicized solutions to Bitcoin’s scaling problem, at least to date, have focused on layer two solutions. That is, those that are on top of the blockchain and do not transact directly on it, such as Lightning Network and Strike.

These solutions remove transactions from the first layer of the blockchain in favor of cheaper networks, called sidechains, which are then settled on the first layer.

For nChain CTO and CTO of the Bitcoin SV infrastructure team, Steve Shadders, finding second-layer solutions to solve scaling not only complicates matters, but moves away from the core benefits and the value proposition of a blockchain. Instead, Shadders argues that Bitcoin could still scale at the first layer, it was just a matter of letting it happen.

Last month in Zurich, at the biannual CoinGeek conference, Shadders gave a live demonstration of what he called Teranode, a multi-machine Bitcoin node implementation built for scale – as it has actively dealt with over 50,000 transactions per second in real time directly on Bitcoin. blockchain SV.

First layer solutions

Compared to the status quo on the Bitcoin network, where first layer solutions are limited to around seven transactions per second, this is a seemingly incredibly large increase.

The key: Approach scaling differently. The traditional view of scaling blockchains is to do vertical scaling, that is, increasing the power of each node to cope with a greater volume of transactions. Teranode contests this position by moving rather horizontally on several basic machines.

“This is how most of the world achieves scale in traditional architectures, think of the Google and Amazon of the world by simply distributing the workload across multiple machines in the most efficient way possible,” Shadders explains.

“Teranode is applying this philosophy to Bitcoin and reinventing the way to implement the Bitcoin protocol. Several different tasks must be performed by a Bitcoin node, most of which are completely independent of each other.

“This means that there is no reason why they have to sit on one machine because there are no cross dependencies between these individual work pieces. “

The Teranode implementation that Shadders showed is underpinned by the Teranode Open Framework, a technology-agnostic model and methodology based on configurable pipelines – essentially an ordered series of tasks unrelated to specific machines, allowing it to adapt horizontally to through clusters of worker nodes.

Teranode applies this methodology to Bitcoin, enabling the efficient allocation of tasks and resources for a node within a configurable and adaptable system. Simply put, this means that Teranode itself is evolving as well. Higher transaction throughput is enabled by adding more worker nodes to clusters and allocating resources between them.

A decade of work

For the most part, CoinGeek Zurich will be the first time the phrase Teranode enters their vernacular. But for Shadders, the live demo was the product of much of a decades-long work, building and developing an idea that was born late one night while in his hometown of Brisbane, Australia.

“Lying in my bed, it must have been close to 2 a.m., and I was thinking about the concepts of microservices architecture and how Bitcoin dependencies are structured internally,” he says.

“Like a total nerd I had a big whiteboard in my room and when it clicked for me I jumped out of bed and just started doodling on it. There was a full moon and I didn’t I hadn’t even had the means to turn on a light, I was frantically drawing boxes.

“My wife woke up a few minutes later and asked me what I was doing, before pointing out that I had no pants on and maybe I would like to talk about it before I move on with something else.”

What Shadders now endearingly calls “the whiteboard incident” and the concepts that emerged from it did not immediately gain traction. They did, however, provide the impetus for his move to London soon after to join nChain, where he was tasked with developing the next generation of Bitcoin node software.

“I already had much of what I needed to continue this project,” he recalls.

“I had already done a lot of work in bitcoinj a Java implementation of the Bitcoin protocol to implement large parts of the protocol’s functionality and developed mining pool software that was used by almost half of the world’s Bitcoin miners at its peak.

“What I didn’t have was a team close enough physically to be able to work together effectively.”

This part of the equation was resolved when Shadders arrived in London, with nChain bringing together a team of programmers and engineers who shared their broad vision for scaling Bitcoin and asked how exactly this could be. put into practice.

Guiding principles

“When we held our first group workshops at nChain in 2019, we wrote a few guiding principles, one of which was to assume no limits on available resources and that each system would be pushed orders of magnitude beyond. of what we’re thinking right now, “he explained.

“This way of thinking meant that some of the ideas and data structures I had in mind that I realized had a cap on scale, it was just that it was way beyond whatever I thought I might need.

“But as time went on and we thought about new ways to use Bitcoin, those assumptions fell apart and we now think of millions, if not billions of transactions per second.”

This innovation comes as Bitcoin continues to take heavy hits in the media over its resource consumption and environmental impact. Shadders argues that Bitcoin’s scaling puts these arguments aside, as the network’s efficiency and potential use cases increase exponentially, completely changing the value proposition.

“Bitcoin’s energy consumption has very little relation to the number of transactions being processed – if you process a million transactions per second, then you are 200,000 times more efficient in energy cost per transaction than average. current of five transactions per second that we see on BTC, ”he adds.

“The cost per transaction is what’s important here. An individual transaction represents a certain amount of utility and we don’t mind using energy to create utility – nobody would say we shouldn’t use energy to run a hospital, because that offers tremendous value to the people who use it and to society in general.

Likewise, if we can define what Bitcoin’s real use is, then we have a metric to measure how much we get from the energy we spend and can ultimately determine the value of the network. And this utility can only be achieved with a Bitcoin that can scale without limits. “

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