Vitalik: "Scalability is a big bottleneck"

Earlier this year, Vitalik admitted that the Ethereum blockchain is “almost full” and that we need a solution…

I was struck by how much of what was said validates what we designed and architected Intercoin to do from the beginning.

It seems even in 2020 we need Intercoin with its non-divisible coins and sharding from day 1.

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I think they just didnt forsee Ethereum gaining so much traction. Sharding has been under development for so long but my bet is they won’t make the 2020 deadline

The reason all this is happening is because Bitcoin and Ethereum are based on Proof of Work global Blockchain. Even if they switch to Proof of Stake it will still be a global Blockchain.

Another thing is how you keep track of what wallets contain. In Bitcoin they store UTXOs so you have to verify the whole chain (can’t shard at all), while Ethereum is based on having each wallet hold account balances. It should be rather straightforward to shard by smart-contract. But, they kind of painted themselves into a corner by having a global blockchain secure everything, so they don’t have any easy solutions.

We spoke to many teams before finalizing the architecture and starting to build. The SAFE Network and Holochain were probably the closest fellow-travelers. As well as projects like Dat and BitTorrent, which have “swarms”.

So in Intercoin each coin would have a different swarm of computers watching it, and it’s hard to take over this set in time to do anything malicious. And each coin is worth very little, so you don’t gain much by taking over an “entire” swarm consensus. The more “global” the consensus the juicier it would be to take it over, which is why you want to shard down to an individual coin. But in Ethereum there is no concept of an individual coin, that doesn’t divide further. They have account balances instead, so they can’t really shard in the way we can. By having each individual coin have its own “consensus” about what the latest state is, you can also do general-purpose computing far cheaper and faster, not just for coins but chatrooms and all kinds of chains. It’s basically zillions of little blockchains, each watched by its own swarm.

And the other thing is that the consensus algorithm. Any process where every honest node comes to the same result can be called consensus. But if we don’t base it on voting (fake news is true if majority believe it?) but on disproving (like in math/science) then it could be resilient even if you take over 80% or 99% of the nodes, as long as they can gossip the disproof. I discussed this with David Schwartz (now the CTO of Ripple) and he basically said it will be good enough for payments. Which is what we’re finally trying to do with crypto.

Bottom line, if the consensus is far more secure and can’t be subverted by a 51% attack, and if we use coin denominations instead of account balances, then we can have each coin watched by a different swarm of computers and it’s not so straightforward or profitable to take over a consensus.

I agree Greg that Ethereum can’t shard in a way that we can. Ethereum’s interest in hybrid systems of using Bitcoin’s Lightning network along with Ethereum also proves that they are NOT sure if their Off-chain architecture will really work alongside Ethereum 2.0 (Serenity) and Casper upgrades.

Scalability issues can be foreseen going all the way to the beginning with the Ethereum Yellow paper ( http://ethereum.github.io/yellowpaper/paper.pdf )

Scalability remains an external concern. With a generalized state transaction function, it becomes difficult to partition and parallelize transactions to apply the divide-and-conquer strategy. Unaddressed, the dynamic value-range of the system remains essentially fixed as the average transaction value increases, the less valuable of them become ignored, being economically pointless to include in the main ledger. (Intercoin’s inter-activity mini ledgers are much more efficient and scalable)

In the article, Buterin noted that to transform blockchain technology into something that people will actually use scalability will have to be solved for crypto to go mainstream. You must build the scalable architecture from the beginning.

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Okay, it’s two years later. Let’s see what happened:

We built applications on the EVM for now.

“If you can’t beat 'em, join 'em” they say. Well, we stayed compliant with regulations so we weren’t able to raise enough to build the Intercoin Protocol… yet. (Although we know exactly how it would be built and even discuss the bigger picture.)

So we built all the Intercoin Applications on top of the EVM, which is the most widely supported compilation target in the world for smart contracts. (Same reason that Qbix built on top of PHP)

Since nearly every blockchain out there now supports the EVM, our apps can be easily ported to all of them. But also, we will be buiolding build new cross-chain solutions bridge from Bitcoin and CityCoins, meaning we can actually make actual city currencies, voting and other applications on a turing-complete virtual machine like the EVM.

We’re building a front end interface

The Intercoin App is aiming to make crypto mainstream. You’ll be able to manage your own community, governance, and issue your own currency, see what the money it’s being spent on, and make decisions as a community by participating in ongoing voting and polling – having the decisions be reflected entirely on-chain.

Blockchains are not the ideal back-end technology for what we’re trying to do, but they’re good enough. The front end wallets also have a major flaw: allowing users to export private keys (causing scammers to trick them into paste private recovery phrases to websites etc.) The keys should never leave the wallet+device combination, but rather the user should be able to manage keys in a keychain, authorizing new keys and revoking certain keys when they get compromised. The key to access the blockchain should be generated either by secret splitting or without even a trusted dealer, e.g. using BLS Signatures. Sadly, I’m not sure we can use these techniques to provide valid ECDSA signatures, but there are ways to keep the keys extra secure.

The Qbix authentication protocol can be used to bridge blockchain, web, and your native phone apps. We can use the Groups app with its 9 million users as the jumping-off point. Get all your contacts to share their own addresses on various EVM chains, etc. and prove ownership privately to each other by signing a given challenge phrase. Then we can have an actually user-friendly wallet that integrates with your address book, and the rest of the Qbix social operating system and its applications

Intercoin Base-Layer Protocol

So what happened to the Intercoin Protocol? We’ve completely designed it. Now all that remains is to build it, over the next couple years. But there’s no hurry, since blockchains work well enough, and it would have to be made compatible with EVM for anyone to care. (Or by the time it launches, probably with EWasm for Ethereum 2.0)

In the meantime, if you want to read about it, click on the “Technology” section

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