Bitcoin Scalability: Validity Rollup Will Make Transactions 100x Faster Claims Researchers


Validity Rollup Could Coming Soon to Bitcoin. Researcher John Light says the rollup could improve functionality on the bitcoin blockchain in a significant way. This includes making transactions faster, more private, and increasing throughput by a factor of 100.

“The Validity Rollup can enable 100x higher throughput than layer one (L1), requiring no block size limit increase and no increase (perhaps even a decrease!) in full node verification costs,” says Light. tweeted,

He produced a lengthy report on the issue as part of the Human Rights Foundation’s ZK-Rollup Research Fellowship. Light received input from cryptocurrency giants such as Ethereum co-founder Vitalik Buterin, Alex Gladstein, Eric Wall, and others.

“We conclude that the Validity Rollup has the potential to improve the scalability, privacy, and programmability of bitcoin without sacrificing bitcoin’s core values ​​or functionality as a peer-to-peer electronic cash system,” the report said. “

“Given the ‘trusted’ nature of the Validity Rollup as a cryptographically secure extension of its core chain, and the position of Bitcoin as the most secure settlement layer, one could also say that these protocols are interoperable with each other.” The perfect match for.”

Bitcoin Legality Rollups: What Are They?

Zero-knowledge (zk) proofs are a technique used by blockchain networks or companies to prove the validity of something such as a transaction. They do not reveal any other information about the same transaction except that it is legitimate.

Mixing services use this technique to obscure crypto transactions to make them more difficult to trace. ZK proofs were first published in 1985 in the paper of Goldwasser et al. Title: “Knowledge Complexity of Interactive Proof Systems.”

In his white paper, Bitcoin founder Satoshi Nakamoto thought about how zk-proofs could be used to “improve the electronic cash protocol he invented.”

The idea was later picked up by cryptographer Greg Maxwell.

Maxwell’s paper in 2011, “Zero Knowledge Contingent Payments”, became the basis for future zk-proof developments in blockchain. The first crypto asset to use the technology was Firo (Zerocoin) in 2016, Light said. This was soon followed by Zcash, primarily as a privacy tool.

As a “rollup”, zero-knowledge proofs are built as a layer-two (L2) solution on top of existing protocols, say Ethereum or Bitcoin, to improve scalability, efficiency, privacy and security. For example, optimism and arbitrum on the Lightning Network of Ethereum and Bitcoin.

The idea is that for blockchain networks to grow into viable alternative payment systems, they must be able to handle large amounts of transactions, data, and users. This is commonly referred to as scalability.

Light believes that defining a protocol that implements zk-proof as “zk-rollup” is a “misname”.

This is because not all zk-rollups use zero-knowledge proofs, “but they all use validity proofs! Therefore, the more accurate term is ‘validity rollups,'” he said.

Scaling the Bitcoin Network Through Rollups

There is a long list of issues that have hindered the growth of Bitcoin (BTC) over the past few years. This includes the failure to attract developers who build more useful protocols and applications on top of the blockchain.

Bitcoin has also faced problems in handling the increased volume of transactions. By comparison, rival blockchains such as Ethereum or Solana have stepped in to fill that gap.

Cryptocurrency researcher John Light said in his report that the validity rollup could lead to a 100x improvement in bitcoin transaction throughput.

This means increasing the number of transactions processed on the network to over 700 per second. Currently, bitcoin processes an average of seven transactions per second, or TPS, at a cost of about $0.68 per transaction.

This is compared to 20 TPS for Ethereum, which costs $0.52 and 3,000 for Solana (SOL). Solana boasts some of the lowest transaction fees in crypto, with an average price of $0.00025. But Ethereum has layer-twos, like Arbitrum, which, according to the press, charges $0.04 per transaction.

performance improvement

The Validity Rollup will improve smart contract functionality on bitcoin. “The L2 Validity Rollup could implement an execution environment that supports a more flexible smart contract language or more advanced privacy, with no further changes required for bitcoin,” Light said.

According to the analyst, the transparency of bitcoin “makes the privacy protocol built on Onchain inherently fragile and, therefore, insufficient to maintain privacy in the long run.”

Developers have been looking for ways to improve bitcoin privacy for many years.

“The Validity Rollup makes it possible to implement these new privacy protocols on bitcoin, while BTC is fully owned at security layer-one,” the report said. “This will provide bitcoin users with state-of-the-art privacy without leaving their BTC self-custodial.”

It says, for example, that Zcash-level privacy protocols that take advantage of zero-knowledge, end-to-end encrypted transaction techniques can be built on bitcoin. This type of technology, also known as “shielded transactions,” makes transactions completely untraceable.

Aztec Network is already running a similar privacy layer on Ethereum, helping users cut costs. “Bitcoin users can achieve both stronger privacy and cost savings for private transactions by going to zk-zk-rollup rather than transacting on bitcoin,” the report said.

Legality Rollup: ‘Great Fit for Bitcoin’

John Light explained that the rollup he proposed has “strong synergies with the Lightning Network,” the payment layer on bitcoin. They enable “more channel open/close/rebalance transactions requiring block space.”

“The additional transaction capacity enabled by the Validity Rollup could be used to support more Lightning transactions, increasing the potential number of users who could use Lightning to self-custodial,” he elaborated. .

Light has put forward a range of benefits that he believes can add value to the bitcoin network, such as rollup layering. This may include one specialized in providing data availability and the other specialized in high-security payments and contracts.

“By enabling more efficient, creative and personal use of bitcoin, the legit rollup could generate new sources of demand for bitcoin block space. This will increase revenue fees for bitcoin miners, which will also increase the security of bitcoin,” he said. .

“Given that validity rollups are ‘trustworthy’ by design, and can be implemented without introducing new risks or sacrificing any of bitcoin’s core value or features, I believe that validity rollups Could be a great fit for bitcoin.”

regulator crosshair

A more privacy-oriented bitcoin network is likely to follow anti-money laundering (AML) laws as it is now increasingly demanded by regulators around the world.

Regulators have long targeted the top cryptocurrencies. These regulators often treat bitcoin as a tool for criminals.

The US Financial Crimes Enforcement Network is the government agency that monitors financial transactions and curbs money laundering and terrorist financing. Earlier, in December 2020, the agency revealed specific plans to go after the crypto asset.

It proposed new rules that require financial intermediaries such as crypto exchanges to report and verify the identities of users transacting through unhosted wallets. Regulators in Europe are also tightening laws around AML, specifically targeting crypto transactions.

John Light agrees that more privacy could be a problem.

“Although the existence of bitcoin itself is a stimulus for authoritarians… the legitimacy rollup could add a whole new provocative dimension to bitcoin,” he acknowledged. There are other disadvantages to the legality rollup on bitcoin.

They can increase the block space from the current 4MB to allow more rollup transactions. They will also instigate a “re-organization war” between competing blockchains, encouraging miners. Rollup imposes new costs on L1 full nodes to verify the validity of transactions.

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