Feed for category: papers
Erlay: Bandwidth-Efficient Transaction Relay for Bitcoin

Transaction relay in Bitcoin is currently a simple scheme, any node announces transactions to every peer in its list, in turn every peer announces it to its peers and so on until the whole network is updated. This is simple but not bandwidth efficient as a transaction can reach one node multiple times through multiple peers, this ensures that there is no single point of failure but is highly inefficient.

Currently any node with 8 connections would be using about 18GB of bandwidth per month, if we increase the amount of peers, further enhancing security, we increase the usage, which would discourage some users from owning a node, according to a new research paper almost 44% of all bandwidth used is redundant.

That’s why a group of Bitcoin developers and researchers created Erlay, an efficient transaction relay protocol for Bitcoin, in simple terms the protocol works by optimizing the transaction relay while maintaining the security aspects, it reduces propagated information by using an efficient set of reconciliation method, it is also designed to withstand attacks like denial of service and timing.

An Overview of the Upcoming Multisignature Standard by Andrew Poelstra

ECDSA has been the preferred signature algorithm for most blockchain networks for verifying ownership and transfer of assets on the networks. However, this complex scheme that has been used in Bitcoin since 2008 started to show its limits. For example difficulties in producing multisignatures and added complexity in second layer Bitcoin networks like Lightning and crhoss-chain atomic swaps. Last year, a proposal called MuSig, or MultiSignature Scheme, was made. It offers many improvements over ECDSA and is probably one the most important cryptographic improvements to Bitcoin that would help increase privacy and efficiency in transactions.

Andrew Poelstra, one of the key researchers and co-author of the paper published a technical overview on this upcoming cryptographic scheme and its applications.

A BIP proposal for 'cancellable' transactions

Alejandro Ranchal Pedrosa and Tucci-Piergiovanni proposed a new BIP to extend OP_CSV1 and/or OP_CLTV2 to allow and interpret negative values.

The discussion that followed concluded that the BIP would be breaking a fundamental rule which is that valid transactions remain valid. This could lead to loss of funds when several transactions are made invalid.

Plasma Scalable Autonomous Smart Contracts

This week’s paper pick was recently published by Joseph Poon and Vitalik Buterin and introduces a framework that allows highly scalable smart contracts:

Plasma is a proposed framework for incentivized and enforced execution of smart contracts which is scalable to a significant amount of state updates per second (potentially billions) enabling the blockchain to be able to represent a significant amount of decentralized financial applications worldwide. These smart contracts are incentivized to continue operation autonomously via network transaction fees, which is ultimately reliant upon the underlying blockchain (e.g. Ethereum) to enforce transactional state transitions.

Paper

[Paper Pick] Preventing Abuse in a Lightning-based Peer-to-Peer Exchange

This week’s brings two papers from the same team on the topic of preventing delay abuse within lightning p2p exchanges:

1. A trusted latency monitor service, for preventing abuse in a Lightning-based peer-to-peer exchange. link

2. Preventing transaction delays with a Lightning routing service, for preventing abuse in a Lightning-based peer-to-peer exchange. link

We covered this subject here and here.

[Paper Pick] Scalable Funding of Bitcoin Micropayment Channel Networks

This week’s paper is Blockstream proposed solution for scaling lighthning by enabling trust-less off-blockchain channel funding.

### Abstract:

The Bitcoin network has scalability problems. To increase its transaction rate and speed, micropayment channel networks have been proposed, however these require to lock funds into specific channels. Moreover, the available space in the blockchain does not allow scaling to a world wide payment system. We propose a new layer that sits in between the blockchain and the payment channels. The new layer addresses the scalability problem by enabling trust-less off-blockchain channel funding.

[Paper Pick] Eltoo a Simple Layer2 Protocol for Bitcoin

This was published alongside the new Eltoo lightning update mechanism by blockstream.

From the abstract:

Bitcoin, and other blockchain based systems, are inherently limited in their scalability. On-chain payments must be verified and stored by every node in the network, meaning that the node with the least re- sources limits the overall throughput of the system as a whole. Layer 2, also called off-chain protocols, are often seen as the solution to these scalability issues: by renegotiating a shared state among a limited set of participants, and not broadcasting the vast majority of state up- dates to the blockchain, the load on the network is reduced. Central to all Layer 2 protocols is the issue of guaranteeing that an old state may not be committed once it has been replaced. In this work we present eltoo, a simple, yet powerful replacement mechanism for Layer 2 protocols. It introduces the idea of state numbers, an on-chain en- forceable variant of sequence numbers that were already present in the original implementation, but that were not enforceable.

[Paper Pick] Quantum Blockchain Using Entanglement in Time

This week’s paper pick, published by Del Rajan and Matt Visser from Victoria University of Wellington on April 17, 2018, is a conceptual design for a quantum blockchain.

A conceptual design for a quantum blockchain is proposed. Our method involves encoding the blockchain into a temporal GHZ (Greenberger–Horne–Zeilinger) state of photons that do not simul- taneously coexist. It is shown that the entanglement in time, as opposed to an entanglement in space, provides the crucial quantum advantage. All the subcomponents of this system have already been shown to be experimentally realized. Perhaps more shockingly, our encoding procedure can be interpreted as non-classically influencing the past; hence this decentralized quantum blockchain can be viewed as a quantum networked time machine.

[Paper Pick] Privacy Preserving Proofs of Solvency for Bitcoin Exchanges

This is the first brief in a new series called Paper Pick that will occasionally allow our readers to discover published papers related to Bitcoin technology.

This week’s paper pick, published on Oct 26, 2015, is a privacy-preserving proof of solvency for bitcoin exchanges that does not disclose the exchange’s Bitcoin address, its total holdings or liabilities, or any information about its customers.

Bitcoin exchanges function like banks, securely holding their customers’ bitcoins on their behalf. Several exchanges have suffered catastrophic losses with customers permanently losing their savings. A proof of solvency demonstrates that the exchange controls sufficient reserves to settle each customer’s account. We introduce Provisions , a privacy-preserving proof of solvency whereby an exchange does not have to disclose its Bitcoin addresses; total holdings or liabilities; or any information about its cus- tomers. We also propose an extension which prevents exchanges from colluding to cover for each other’s losses. We have implemented Provisions and show that it offers practical computation times and proof sizes even for a large Bitcoin exchange with millions of customers.

If you want to share a paper to include on our weekly briefs, feel free to contact us at authors@bitcointechweekly.com