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Three Very Different Paths to Blockchain Scaling

Three Very Different Paths to Blockchain Scaling

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Cryptocurrency markets have been doing extremely well over the last 48 hours, making a lot of prior skeptics think the bearish crypto winter may have ended. Since our last markets update three days ago, the entire cryptoconomy has gained close to $33 billion in value and trading sessions over the last 24 hours produced a whopping $81 billion in global trades.Also read: Bitcoin’s Software Has Been Rolled Back BeforeLast week, the community dealt with the Binance loss of over $40 million (7,000 BTC) and the whole cryptoconomy tumbled in value for a short period of time. During our last markets update, we reported on how crypto prices regained their losses and continued their bullish trajectories upwards. Today on May 11, the ecosystem is doing far better than most expected with an overall market capitalization of around $210 billion. In addition to the increased value, global trade volume has increased by over $25 billion since last Wednesday.Markets Update: Crypto Bulls Outpace Stocks and GoldAt the moment, the market price of bitcoin core (BTC) is roughly $6,921 and the currency is up 7.9% in the last 24 hours. Ethereum (ETH) markets are up 11.5% today and each token is trading for $195. The third highest market valuation is ripple (XRP) which is trading for $0.32 per coin. Lastly, the forerunner out of the top five coins is litecoin (LTC) at $88 per LTC as the currency’s gained 16.7%.Bitcoin cash is up this Saturday by 15.9% and over 18% for the last seven days. BCH has an overall market valuation of around $5.9 billion and about $2.8 billion in 24-hour trade volume. The decentralized currency is the sixth most traded coin globally below eos and above ripple. The top exchanges swapping the most bitcoin cash today include Lbank, Coinbene, P2pb2b, Digifinex, and Bitmart. The currency pair traded with the BCH the most today is tether (USDT), at 49.3%. This is followed by BTC (33.1%), USD (6.9%), KRW (5.9%), and JPY (1.6%). Both ethereum and the euro capture a little more than 1% of today’s BCH global trade volume as well.Markets Update: Crypto Bulls Outpace Stocks and GoldLooking at the 4-hour BCH/USD chart on Kraken shows bulls have blown past major resistance at the $300 region and prices are hovering around $335 per unit at press time. Most moving averages are indicating strong bullish signals with the two long and short term Simple Moving Averages (SMA) spreading. At the moment, the short-term 100 SMA is well above the longer term 200 SMA trendline indicating the path toward the least resistance is still the upside.Markets Update: Crypto Bulls Outpace Stocks and GoldHowever, the Relative Strength Index (RSI) shows overbought conditions on the 4-hour chart and the Stochastic is impartial. With the price blazing through new territories, there could be a slight pullback after the peak. The MACd shows a bullish crossover has taken place while the Average Directional Index is neutral at the moment. BCH/USD order books show some stronger resistance levels from the current vantage point all the way to the $360 range. On the backside, there’s some consolidated support levels between $320 to the $300 zone.So far cryptocurrencies have done extremely well in 2019, outpacing popular commodities like gold and top performing stocks as well. A large portion of the top cryptocurrencies have gained 50% or more year-to-date. Vinny Lingham has stated that if BTC can hold above the $6,200 range for 24-48 hours he will believe the bear market is over.Markets Update: Crypto Bulls Outpace Stocks and GoldBCH has done amazingly well over the last two months and has surged in value significantly. The Bitcoin Cash protocol will soon be upgraded, gaining Schnorr signatures adding more attributes to the network such as scaling and privacy. While there are some who still believe the bear market might not be over, lately it’s been hard for even the staunchest of cynics not to feel a little bullish.Where do you see the price of bitcoin cash and the rest of the crypto markets heading from here? Let us know what you think about this subject in the comments section below.Disclaimer: Price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”Images via Shutterstock, Trading View, Bitcoin.com Markets, and Coinlib.io.Want to create your own secure cold storage paper wallet? Check our tools section. On May 13, cryptocurrency enthusiasts were pleased to hear that major retailers including Whole Foods, Lowes, Petco, Regal Cinemas, and… read more. One of the most enduring mysteries of modern times has produced another enthralling twist. Satoshi Nakamoto, Bitcoin’s pseudonymous and enigmatic… read more. Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.
How do you scale a blockchain so that it can process hundreds or even thousands of transactions per second – but without compromising on decentralization? It’s a question that has kept some of the brightest minds in the space awake at night, and some of the more ardent crypto factions sniping at each other for years. In this primer on blockchain scaling, news.Bitcoin.com looks at the very different approaches being taken by three prominent cryptocurrency projects – Bitcoin Core, Bitcoin Cash, and Zilliqa.Also read: Decryptionary Helps New Investors Understand Crypto TermsIn Bitcoin’s early years, scaling was rarely discussed because it simply wasn’t a problem. Transactions per second (TPS) were low, fees were low, and there were more important concerns, like resolving critical bugs, and creating an ecosystem that would support a vibrant community of users who would ensure Bitcoin survived long enough to need to scale. That’s not to say that scaling was never broached; in fact the topic was discussed on multiple occasions on the Bitcointalk forum, on IRC chat and in emails, but with little urgency.For example, in an email with Bitcoinj developer Mike Hearn, Satoshi proposed the idea of payment channels in which parties “can keep updating a tx by unanimous agreement …Only the final outcome gets recorded by the network.” Advocates of the Lightning Network have seized upon this as evidence of Satoshi’s vision for a layer two solution built upon the Bitcoin protocol. Given Satoshi’s near-nine-year absence, however, it is impossible to say with any certainty what his vision may have been for scaling Bitcoin along these lines.One interesting point of note, however, is that Bitcoin launched without a block size limit. It would be a year before Satoshi introduced a 1MB block size limit to prevent spam attacks. Tellingly, Bitcoin’s creator envisaged a future in which larger block sizes could be introduced to the network, writing, in October 2010, that a larger block size “can be phased in, like: if (blocknumber > 115000), maxblocksize = largerlimit.” As such, proponents of the scaling approaches since taken by BTC (layer two/LN) and BCH (bigger blocks) can both lay claim to a solution that aligns with some of Satoshi’s early ideas. We’ll examine the pros and cons to each approach shortly, after considering a very different approach to blockchain scaling.If bigger blocks can be likened to building a bigger factory, then sharding is akin to creating an assembly line within that factory, so that each worker (miner) is given a specialist task – namely, verifying a portion of the block rather the whole thing. Zilliqa is the crypto network known for popularizing this scaling technique, after its founders authored a paper in 2016 on the feasibility of introducing sharding to public blockchains. Through splitting the transaction verification process into multiple parts – or shards – it’s possible to significantly increase the throughput, resulting in magnitudes more TPS.Three Very Different Paths to Blockchain ScalingIn recent testnet trials, using a network of 2,400 nodes, Zilliqa claims to have recorded throughput of around 2,800 tx/s. When asked about the feasibility of applying sharding to UTXO chains such as Bitcoin, Amrit Kumar, Chief Science Officer with Zilliqa, told news.Bitcoin.com that “sharding can indeed be used for UTXO based chains. In fact, there have been a couple of academic works that study sharding particularly for UTXO-based chains.” Sharding will play a pivotal role in Ethereum’s scaling strategy. Although capable of dramatically increasing throughput, this approach has its trade-offs, which we’ll examine shortly, but first, back to Bitcoin and the acrimonious split that arose from opposing scaling ideologies.As Aaron van Wirdum wrote in “The Long Road to Segwit,” “It had been looming for some time, technically since October 2010, more concretely since February 2013 and finally publicly, bursting onto the scene by the spring of 2015: the block size limit dispute.” This battle saw developers such as Gavin Andresen and Mike Hearn favor increasing BTC’s block size from 1 MB, while Bitcoin Core developers loyal to Blockstream, which launched in 2014, favored retaining the 1 MB cap, and scaling through other means. Initially, this was to be achieved through Segwit, which reduces the average size of each transaction, but the endgame was to be the Lightning Network, a layer two solution in which multiple transactions occur offchain, with only the initial and final transactions being recorded onchain.Three Very Different Paths to Blockchain ScalingDue to its complexity, development of Lightning has been beset by repeated delays and UX issues, and the network is still not fully production ready. However, the network has been growing steadily through 2019, and now holds close to 1,100 BTC, has over 8,300 nodes, and more than 38,000 channels. The advantages of LN include the potential to settle transactions almost instantly at negligible cost. Lightning has its share of critics, though, who take issue with its complexity, and its reliance on liquidity providers which to all intents and purposes makes the network a relatively centralized and custodial solution.Many of those who believe that scaling should be handled onchain have migrated to Bitcoin Cash, which will soon be approaching its two-year anniversary. 8 MB blocks have been processed by miners without any difficulty, and fees have remained low, enabling BCH to be sent for less than a cent. Critics of the big block approach tend to have two points of attack: that large blocks take longer to propagate across the network and that when the block reward is reduced, in years to come, transaction fees won’t be enough to incentivize miners to secure the network.Three Very Different Paths to Blockchain ScalingAdvocates of big blocks assert that ever-improving data storage costs and download speeds negate the first criticism, while the diminishing block reward can be dealt with further down the line. At this point in time, at least, Bitcoin Cash is working as its proponents envisaged. Due to deep-seated differences and ongoing acrimony, however, onchain and offchain evangelists will likely never see eye to eye. There is too much water under the bridge and insults traded on crypto Twitter for the Core and Cash brigades to achieve concord.Although big blocks and Lightning Network are presented as binary options for scaling Bitcoin, these are in fact merely the two prevailing approaches currently favored by BCH and BTC respectively. In reality, there are many other proposals for increasing throughput, including sidechains, which can take much of the strain off the network without having to switch to quasi-custodial solutions such as LN.Although associated with so-called second generation blockchains, for example, sharding is also viable for UTXO chains such as BTC and BCH. It too has it drawbacks, however, which must be accommodated. As Zilliqa’s Amrit Kumar explains, “In a non-sharded network every single node verifies every single transaction. However, in a sharded network, only a subset of the network verifies each transaction. So, yes, the security guarantee that you get is slightly weaker in theory.”“However, in practice,” Kumar added, “if the shard size (the number of nodes in each shard) is sufficiently large – say around 600 – and randomly chosen from the initial network, then the chances that anything bad will happen in the shard is infinitesimally small.”Three Very Different Paths to Blockchain ScalingWhile different blockchains press ahead with different visions on how to achieve high throughput, divergence between projects increases. What began with Bitcoin has now fragmented into a series of crypto networks, each doggedly pursuing their own path to scaling.What are your thoughts on the different scaling solutions favored by BCH, BTC, and ZIL? Let us know in the comments section below.Images courtesy of Shutterstock.Did you know you can verify any unconfirmed Bitcoin transaction with our Bitcoin Block Explorer tool? Simply complete a Bitcoin address search to view it on the blockchain. Plus, visit our Bitcoin Charts to see what’s happening in the industry. The Simple Ledger Protocol (SLP) has garnered a lot of attention over the last few months as there's been a… read more. Crypto Twitter (CT) is a grueling battleground between digital currency enthusiasts, company executives, maximalists, journalists, lawyers, and so-called thought leaders… read more. Kai's been playing with words for a living since 2009 and bought his first bitcoin at $19. It's long gone. He's previously written white papers for blockchain startups and is especially interested in P2P exchanges and DNMs.

Source from : News.bitcoin
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