A Scorex application is comprised if core, and Scorex itself is the core functions and module interfaces, and modules. The current testnet, Lagonaki, is made of Permacoin consensus protocol implementation and a simplest Nxt-like payments module. Next testnet release will be called Ergaki. It will be truly experimental and innovative blockchain system intended to be a performant public bulletin board for different protocol(voting, auctions etc). What will be inside Ergaki?

1. New Proof-of-Work scheme based on RollerChain. Rational behaviour will be switched on by default, so a node will remove blocks not needed for Proof-of-Work mining. We are also thinking about increasing throughtput with Ghost/Spectre or Bitcoin-NG/ByzCoin scheme.

2. New transactional module. State will be comprised of boxes, transactional model will be different from Bitcoin, so no stack-language scripts.

3. New fees model. Basically, a minimal mandatory fee will be not calculated based on a transaction size, but on state increment. So if a transaction is about state size lowering, it is about minimal or no fee at all. And storing boxes in a state will be charged not for size only, but for life timespan also(with possible exception for a box of some minimal size). So, unlike all other blockchains, it would be not possible to store anything in the Ergaki blockchain forever paying only once.

4. New improved difficulty adjustment algorithm. A paper on that is basically ready and will be published before release.

We will test Ergaki on some applications using large testbed against a private Ethereum network. The goal is outperform the latter by the orders of magnitude.

Planned testnet release time is about September, 2016.

The first Scorex-based testnet, Lagonaki, combines the Permacoin consensus protocol implementation with a simple, Nxt-like payments module. After Lagonaki, the next Scorex-based testnet will be Ergaki, a block chain system that will be used as a public and performant bulletin board for various protocols including voting and auctions. The components of Ergaki are the following:

1. A new Proof-of-Work scheme based on RollerChain. By default, nodes will follow a "rational behavior", and will remove blocks that are not needed for Proof-of-Work mining. Potentially, a scheme like Ghost/Spectre or Bitcoin-NG/ByzCoin will be used to increase the system's troughput.

2. A new transactional module where state will be comprised of boxes. This transactional model will be different from that of Bitcoin, therefore there will be no stack-language scripts.

3. A new fee model by which mandatory fees will not be based on transaction size but on state increment. For example, a transaction that is lowering the state size would have a minimal or no fee at all. In addition, the storage of boxes in a state will incur fees not only based on size, but also based on life timespan also, with a possible exception for a box of some minimal size. So, unlike all other blockchains, it would be not possible to store anything in the Ergaki blockchain forever by paying only once.

4. A new improved difficulty-adjustment algorithm. A white-paper on that is basically ready and will be published before the release of Ergaki.

The IOHK Scorex team will test the Ergaki testnet on some applications by using a large testbed against a private Ethereum network. The goal is outperform the latter by the orders of magnitude.

Ergaki is planned to be released in September, 2016.

On Mike

After reading Mike Hearn's

The point of decentralized systems is never to reach ubiquitous consensus about truth. Settling upon a final truth is pyrrhic at best and almost certainly a sisyphean endeavor. The goal is to facilitate the free flow of ideas and provide an effective framework to actually test them with something at stake.

Mike was a voice for a certain philosophy and regardless of whether you feel that philosophy is correct, it is a terrible tragedy that our community descended into the murky swamps of censorship and personal attacks. I will miss Mike and want to extend a profound thank you for all he has done and good luck on future projects.

All this said about Mike's contributions and positive influence on the space, I would be remiss if I didn't comment on his core argument that the Bitcoin project has failed. It's not only wrong, but utterly offensive to the thousands who have contributed weekends, painful explanations about the nature of money to their friends at bars and the repeated scorn of having to endure the scams, exchange failures and regulatory misunderstandings.

Mike thinks we don't matter :(

In Pounds; Paid in Bitcoin

Furthermore, the state of Bitcoin technology has never been better. One has to look no further than the Princeton bitcoin paper to see the amazing diversity of interesting problems being examined in academia and industry. A recent redditor posted a database of over 600 papers on Bitcoin or related to cryptocurrency technology. IC3 is a joint research group of two major US universities lead by some of the top cryptographers in the world and they have received a 3 million dollar NSF grant to study cryptocurrency technology. And yes those scaling bitcoin conferences were very productive and included a lot of wonderful industry support:

Mike thinks we don't matter :(

Bitcoin has hundreds of thousands of passionate people, over a billion dollars in VC money and the support of ideas from over a thousand altcoins running experiments including Bitshares and Ethereum. The fact that we are having a transaction crisis is a symptom of success not coming doom!

So Mike I'm terribly sorry that you lost the XT fight and it's definitely true that it wasn't a fair fight, but don't take your anger out on Bitcoin the experiment nor the Bitcoin community:

Darth Vader on Mike Hearn

Some Basics About Blocksize

Now on to blocksize, there is already a great deal of detailed content floating around the interwebs on the various issues thus I will quickly summarize the crux of the matter. Bitcoin blocks have an arbitrary size cap of X MBs and each transaction takes on average Y bytes. As the network grows, we will (and have) hit this cap and the result will be an overall reduction of performance, reliability and robustness of the Bitcoin network.

So how does one resolve this seemingly intractable problem? The naive and kicking the can down the road solution is simply to increase the blocksize from X to a new arbitrary amount- say X(1). If Bitcoin continues to grow, then we'd have the same debate all over again in a few months or perhaps years (

One could also increase the rate of block production (referred to as the block interval). There have been several proposals to do this in a way that wouldn't increase the amount of stale blocks and Ethereum even implemented one called

We could approach the problem from the other side by examining transactions. Again the most naive approach is to reduce the size of transactions from Y to something smaller say Y(1). Again this approach doesn't solve the fundamental problem that future growth will push blocks to their cap.

Along the same line of thought, one could create a mechanism to gradually retire transactions (called pruning) or reduce the amount stored on chain. There have been some interesting ideas proposed like

Finally, one could push transactions off-chain so they don't appear in the Bitcoin network at all or eventually in a reduced form. This idea is seen in efforts like the

Blade Runner's take on Transaction Pruning and Off-Chain Solutions

Off-chain is compelling, but still has a lot of unresolved questions about trust models, security concerns, centralization issues (in certain cases) and also unpredictable privacy (for example, if transactions are moving to a new network, then the gatekeepers of that network could attach metadata to the transactions for KYC/AML and other such things). Furthermore, the practical question of why bother seems to be looming? We are going to solve the issues of Bitcoin by using federated or centralized actors?

I recall the argument to get merchants to adopt bitcoin is to use services like Bitpay, yet then we go back to the solution to asset volatility of our decentralized network is to connect all the merchants to a centralized service provider? The same applies for transaction scalability solutions for the Bitcoin network. Seek decentralization wherever possible!

What the Bitcoin movement is trying to do in a nutshell

 

Solutions in a Technological Context

 

I created this graphic on Gliffy. Gliffy is pretty Spiffy!

The diagram above presents a rough idea of what the Bitcoin blockchain actually looks like. There are two components: a block header and the block body storing the actual transactions.

All the parts are wired together with some form of crypto. The block body is connected to the header via a merkle tree data structure. The headers are wired together via hash pointers. And proof of work provides a mechanism for validating a given collection of blocks (the proposed blockchain) is the correct one via the notion of algorithmic weight (the proposed chain with the most work wins).

So we have been given a menu of options to change the core protocol to reflect the goal of more transactions. Increasing the blocksize makes the block contents heavier (larger merkle tree), but has no impact on the block header. It's an interesting question to consider the impact of larger blocks on block propagation times. I'd highly recommend this

Reducing the block interval will likely involve changing the structure from a single hash pointer to multiple hash pointers to different blocks, but no impact on the block contents. Inclusion of double spend transactions and longest chain selection rules are the topics of primary interest here. I'd recommend two papers to get a deeper understanding. First, Sergio Lerner's

Pruning means that over time certain leaves in the merkle tree should be removed or perhaps even entire blocks replaced with different representations. It's also interesting to consider what other authenticated data structures could be put into the block headers to improve scalability or better facilitate pruning schemes without compromising trust. The Bitcoin wonderkid researcher Andrew Miller has

And finally off-chain means that we are effectively wiring something more onto the block via the header or more likely in the block contents. The concept here is separation of concerns and layering. For example,

The separation of block headers from the block contents does suggest a path to heterogeneity via light nodes holding only the header collection; however, again this action isn't forced upon anyone.

Now enter 2016, Bitcoin is a very different animal. The Bitcoin blockchain has grown considerably. Mining is heavily centralized:

These Guys Own More than 51 Percent of the Mining Power

There are millions of dollars of value floating around every block. There are numerous, well-funded business interests and even a cabal of powerful bankers scheming in a sufficiently NWOish named group called R3CEV:

Totally not trying to co-opt the ecosystem!

Thus things have really changed over the past seven years beyond the humble beginnings of Hal and Satoshi trying to get the wallet to work in order to send a single transaction (It was block 170 BTW- a whole 10 bitcoins!).

I feel that this debate has exposed more than certain people's inability to work productively with each other or the need for a new set of reddit moderators. It has exposed that Bitcoin is basically at a philosophical impasse. There really isn't a clear direction for the Bitcoin ecosystem to take. Is it supposed to be the ultimate payment system with a super cool deflationary digital gold coin backing it? Is it a settlement layer for many systems to eventually clear upon? Is it the arbiter of digital truth providing a cryptographic beacon, notary services and a logical clock? Is it a system for decentralized governance?

Fair arguments can be made for any of these directions and there is a legion of good tech to sneak into the protocol to make Bitcoin better suited for these tasks. In general, Bitcoin could basically be the entire financial stack:

Bitcoin could be the whole stack

We simply cannot productively move forward until the meta-question of what does bitcoin want to be when it grows up is answered. There is no measuring stick to say ok this is good enough. For example, 3 transactions per second is absolutely fine if our goal is settlement of large contracts between multibillion dollar actors, but it's terrible if we are trying to replace VISA.

Should Bitcoin be blind and deaf to other systems and cryptocurrency or does it need to talk to them on a regular basis? Are we going to tokenize all assets like gold and USDs and trade them in a decentralized network? Or are we going to trade them on exchanges and move them between exchanges using some connection to the Bitcoin blockchain? If there is a dispute, then is arbitration connected to the data held on a blockchain?

Each of these questions and the hundreds more have a dramatic impact on what needs to go into a transaction, how of many per second we need to include in the Bitcoin blockchain and also the intended set of users. Let's be intellectually honest, have we answered them? Where do you even go to start that process? Who gets to decide?

In effect, we don't have a blocksize crisis, we have a governance and philosophy crisis. And the pain will continue until this crisis has been resolved either out of some cabal gaining control of the network or by a new mechanism to decide things in a decentralized manner (See

Second, adopt the plan devised at the scaling bitcoin conference. It's reasonable and doesn't require dramatic action. Segregated witnesses in particular are a very solid concept. Furthermore, scaling bitcoin should really be a bi-annual event moving forward- get people talking to each other on a regular basis.

Both of these actions will take the pain off of the network and give us some breathing room. We have to then move on to phase II, which is investing in some foundational technology to radically improve the entire network.

Until the development of Bitcoin is free from outside corporate influences, it can't be discussed in an objective and fact based way, and the stakeholders of the system are able to decide instead of a cabal of well capitalized actors, we aren't going to gain the resilience of the crowd.

This phase is probably an innovation of the size and scale of Bitcoin itself and thus is unlikely to materialize immediately, but organically over a collection of hundreds of experiments. And like Bitcoin, it would fundamentally change the very nature of organizations, their mandate and the flow of funding.

Thanks for Reading!