Forward Blocks: A proposal to increase on-chain settlement capacity without hardfork
Almost every effort being done on Bitcoin’s development and research currently is being done to make Bitcoin’s scaling problem go away, we’ve seen how just a little adoption can cause a massive increase in transactions fees in December last year and the Bitcoin community is not going to let that happen again.
There are two ways to go here, off-chain scaling lead by the Lightning Network and on-chain scaling lead by technologies like SegWit, Schnorr Signatures and others.
During the Scaling Bitcoin conference, Mark Friedenbach presented a proposal called Forward Blocks. It aims to increase on-chain scaling by up to 3584 times. Among other things, it also provides a framework accounting in future Bitcoin upgrades like Mimblewimble, sharding, confidential transactions, ring signatures and a rebatable fee market.
In a nutshell, it works by combining several approaches for on-chain scaling that each had unacceptable tradeoffs on their own, but combining them cancels out these tradeoffs and leaves us with an acceptable form of a soft-fork.
The previous approaches were Hard Forks, Extension Blocks via soft-forks, Sidechains via softforks and Time-Warp Attacks that increase the amount of blocks without increasing the block size.
The proposal essentially creates a new chain with a new proof of work algorithm, this algorithm could be a totally new algorithm or it could be just another form of the currently used one (SHA256). On the course of multiple years, slowly the difficulty of the old chain will decrease, along with its mining rewards, and the difficulty of the new chain will increase, during the transition period full nodes of the original blockchain will keep seeing transactions but will see them less often and will recognize that their rewards are lower.
Coordination between miners of both chains will be needed as miners of the new chains will mine the transactions and order them, while miners of the old chain will look to the new chain for the order of the transactions and will produce only empty blocks with valid headers, not mining any transactions themselves.
The new chain is called the forward blockchain as it mines transactions in advance as they are relayed to the old, compatibility chain, for older non-upgraded clients to see. The aggregate block limits of the new chain are not the same as the old chain and can have different blockweight and signature operation limits, as long as the biggest transaction on the new chain is smaller than the block size limit of the older chain.
The different size limit on the new blockchain will put a stress on the miners of the old blockchain to “catch up” to the new one, this will happen by a coordinated Time-Warp attack in which miners on the old blockchain drop the difficulty and release transactions much faster than it is supposed to be, thus allowing the old blockchain to synchronize with the new one.
The paper, produced by Mark Friedenbach, goes into details about the initial configuration of the forward blockchain, how to fight double spending, allowing multiple forward blockchains and much more details that can not be explained in an article as this one, if you’d like to read the paper you can find it here and you can watch a talk by Mark further explaining his idea here.
If it works, this could be a major addition to Bitcoin’s scalability, we’re excited to see what the future holds for Forward Blocks!
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