View article

Bitcoin and other cryptocurrencies provide an attractive and exciting alternative form of currency, as they provide the convenience of credit cards, the usability of cash, the security of a bank vault, and retain their values like gold, without the associated high fees and cumbersomeness. They further enable futuristic services such as paying for groceries as they are being collected or picking up a rented umbrella for a minute’s walk without ever standing in line. Cryptocurrencies can enable these services without pre-payment or pre-registration and more crucially, without placing trust in the providers of these services. Such features are currently unfeasible due to payment processing fees which makes such micro-transactions uneconomical. To be truly useful for ordinary men and women all around the world, cryptocurrencies must scale the number of transactions they can process by a factor of x1, 000, from 3–5 transactions per second (Bitcoin and Ethereum) to thousands of transactions per second. In fact, hundreds of transactions per second will be required only to enable US cars to pay for gas on a bi-monthly basis, or alternatively, to process the cups of coffee purchased at Starbucks. To allow machine-to-machine micro-transactions, and realize their potential in earnest, cryptocurrencies must scale much further. The limiting factor of Bitcoin and other cryptocurrencies is their network. Specifically, they employ a trustless P2P network model to propagate transactions and blocks, which does not scale as the volume of transactions increases, a fact research has shown time and again. Indeed, if blocks and transactions were to be instantly propagated …