[Paper] The BlockReduce Proposal to allow for 100tps+ with Bitcoin

The idea behind blockchain is to provide a platform for interaction in a decentralized, peer-to-peer environment without need for a central figure or point of trust. This technology has seen probably more adoption than the inventors had imagined.

However, the current blockchain hardly allows more than 10 transactions Per Second (TPS), thus presenting a serious scalability problem. Some solutions to this issue have traded the decentralized nature of the network for a more centralized structure or introduced hierarchy that makes the network a pseudo centralized one at best.

BlockReduce is an idea that rewards work and also “optimization of network constraints and efficient propagation of transactions” by creating hierarchy of “tightly-coupled, merge-mined blockchains” managed by Proof-of-Work (PoW). This leads to an amazing 3+ orders of magnitude improvement in the TPS without introducing hierarchical power structure or centralization.

Unlike previous proposals to improve blockchain scalability in a PoW system, BlockReduce satisfies all the key scaling requirements namely throughput (transactions per second), verifiability, Byzantine fault tolerance, fungibility, and economic sustainability

Abstract from the paper:

Blockchains have shown great promise as peer-to-peer digital currency systems over the past 10 years. However, with increased popularity, the demand for processing transactions has also grown leading to increased costs, confirmation times, and limited blockchain utility. There have been a number of proposals on how to scale blockchains, such as Plasma, Polkadot, Elastico, RapidChain, Bitcoin-NG, and OmniLedger. These solutions all propose the segmentation of every function of a blockchain, namely consensus, permanent data storage, transaction processing, and consistency, which significantly increases the complexity and difficulty of implementation. BlockReduce is a new blockchain structure which only segments consistency, allowing it to scale to handle tens of thousands of transactions per second without impacting fault tolerance or decentralization. Moreover, BlockReduce will significantly decrease node bandwidth requirements and network latency through incentives while simultaneously minimizing other resource demands in order to prevent centralization of nodes.

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