Scalability

In the Bitcoin consensus network, all nodes come to agreement on the set of Unspent Transaction Outputs (The “UTXO” set). The size of this shared state is a scalability constraint for the network, as the size of the set expands as more users join the system, increasing resource requirements of all nodes. Decoupling the network’s state size from the storage requirements of individual machines would reduce hardware requirements of validating nodes. We introduce a hash based accumulator to locally represent the UTXO set, which is logarithmic in the size of the full set. Nodes attach and propagate inclusion proofs to the inputs of transactions, which along with the accumulator state, give all the information needed to validate a transaction. While the size of the inclusion proofs results in an increase in network traffic, these proofs can be discarded after verification, and aggregation methods can reduce their size to a manageable level of overhead. In our simulations of downloading Bitcoin’s blockchain up to early 2019 with 500MB of RAM allocated for caching, the proofs only add approximately 25% to the amount otherwise downloaded.

Public blockchains have serious problems with scaling and interoperability. The Lightning Network addresses these with a decentralized system for instant, high-volume micropayments removing the risk of delegating custody of funds to trusted third parties.

Discreet log contracts are an exciting new technology that facilitates conditional payments on bitcoin and compatible blockchains

By creating a Discreet Log Contract, two parties can form a monetary contract redistributing their funds to each other, based on preset conditions, without revealing any details of those conditions to the blockchain. Its appearance on the blockchain will be no different than an ordinary multi signature output. Therefore the contract is discreet in the sense that no external observer can learn its existence or details from the public ledger.

Bitcoin has become the most successful cryptocurrency ever deployed, and its most distinctive feature is that it is decentralized. Its underlying protocol (Nakamoto consensus) achieves this by using proof of work, which has the drawback that it causes the consumption of vast amounts of energy to maintain the ledger. Moreover, Bitcoin mining dynamics have become less distributed over time.

Towards addressing these issues, we propose SpaceMint, a cryptocurrency based on proofs of spaceinstead of proofs of work. Miners in SpaceMint dedicate disk space rather than computation. We argue that SpaceMint’s design solves or alleviates several of Bitcoin’s issues: most notably, its large energy consumption. SpaceMint also rewards smaller miners fairly according to their contribution to the network, thus incentivizing more distributed participation.

This paper adapts proof of space to enable its use in cryptocurrency, studies the attacks that can arise against a Bitcoin-like blockchain that uses proof of space, and proposes a new blockchain format and transaction types to address these attacks. Our prototype shows that initializing 1 TB for mining takes about a day (a one-off setup cost), and miners spend on average just a fraction of a second per block mined. Finally, we provide a game-theoretic analysis modeling SpaceMint as an extensive game (the canonical game-theoretic notion for games that take place over time) and show that this stylized game satisfies a strong equilibrium notion, thereby arguing for SpaceMint’s stability and consensus.

∗In an early version, our proposal was called “Spacecoin.” We changed it to “SpaceMint” due to name conflicts.

Published in the 22nd International Conference on Financial Cryptography and Data Security (Financial Crypto 2018)