Background on Bitcoins and Then We'll Slowly Build it Up to the point where We can See the Issues in Bitcoin Scalability and what Is?

Being Done in Current Blockchain Designs to Address These issues in Scalability the key Metrics that, we are Looking at

Here Are the Throughput of the System that Is what Is the Maximum rate at Which Transactions can be Handled

By the System in Terms of writing Them to the Blockchain and

then The other Metric Is that of Latency

That Is from the point When A client Submits a transaction to the system?

How Long Does it Take until it's written to the Blockchain I

Think some History, Would be nice so bitcoin Appeared on the Scene in

2008 On an online Meaning Mailing List by a pseudonymous Author Called

Satoshi Nakamoto Whose Origin Is Unknown and

Then The next Year in

2009 There was A software Release of Bitcoin and it Generated A lot of Interest

Since its Inception because it went on to become one of the biggest Digital

Currencies of our Times so just Today a one Bitcoin is Worth About

$6,000 yet on the other end of the Spectrum There are People who have Said that

Blockchain is the biggest Bubble of our Times the Aspect of Bitcoin that Really Gives it its wings Is

The Blockchain Which Is at the heart of Bitcoin

Now A lot of People Have Started to become Interested in Block Chains Because These can be Applied to

other Scenarios Which Are Beyond its immediate Application to Digital Currencies

We did A video with tom Scott About online

Voting and The Blockchain was not mentioned at all but Lots of the Comments of People who Watch that Video Say?

Why can't We do voting with a blockchain Is this one of the Applications you're Talking About

yes Exactly if You look at the Blockchain

One of the key Properties of the Blockchain that

Distinguishes It from Regular Traditional Databases Is that of public Verifiability and

Public Verifiability is enabled by two other Properties Called Integrity and Transparency

Now by, transparency, We mean That anyone can verify

How the State of Data has Been Updated and

By Integrity we mean that anybody can

Be sure that the Data that they are Retrieving Is

Not Corrupt and it is correct. I can imagine that it would be a feats an

Engineer A system for 60 Million People Living in the Uk but Never mind how, Many People are Living in China or India

Or some of the other Nations That have got, Many, Many more People. Is that the sort of Scalability, we're Going to be Talking About

Well This is the Kind of Scalability that, We are Going to Talk about but Let's not Forget that Systems like Google or Facebook

Also deal With may, be much greater Magnitude of Users but the advantage that These systems have, over

Systems Like Blockchain Is that They are Centralized Systems that are under The Control of a single entity Or a consortium of

Entities While in A blockchain the Network Is

Between A Fully Decentralized Set of Nodes so what does a blockchain really Look like

Well you Can Think of a blockchain as a linked List of Hash Pointers so a hash Pointer Is Simply A

Hash of some Data and Now

We are going to look at a linked List of Hash Pointers so in the Beginning We need to start from Somewhere so we have?

Sort of A

Dummy Or a Padding, Data Called Genesis Block and We Take the hash of This first Block?

Which Is

Included in The Header of the next Piece of Data

So there is A hash Pointer Which points to the Previous Piece of Data and new Data then the next Block and it's Called ST-1

Then Imagine that you Have Another Piece of Data and this is the simplest Form of Lock Chain so as you can See

This is a linked List of Hash Pointers Now the hash Point Ourselves Two Purposes

The First Purpose Is that it Uniquely identifies The Previous Block of Data

so a hash Pointers

IDentifies The Data and the Hash Pointers due To the Properties of Hashing Functions

Also Confirms that the Data has not, Been Corrupted you Can Think of it as a temporal evident Log and Anybody

Can independently Take Hash of this Data Match it with the hash included in The next Piece of Data

Compare These Two and if These Two Match then They can, be sure that the Data has not

Been Corrupted There Are Two Kinds of Operations That Can be Performed on a blockchain

One is a read Operation and one is A write Operation

Now as you might have guessed Read Operations are Easy Because they, Simply, Involves Retrieving, some Data of the Blockchain

However Write Operations Are More Challenging Because They Can

Potentially Hurt The Properties of Transparency and intake Integrity That We Expect From the Blockchain

So a blockchain has Two basic functional Components one Is to Validate Transactions and the other is to write to the Blockchain

We are First going to Talk about Validation of Transactions what is the Transaction?

You Can Think of a transaction IS an Operation that

Changes The State of Data That Lives on the Blockchain

Okay, so let's Look at A very Simple Example in The Context of Bitcoin

So a transaction might Look something like

Say Ten Bitcoins to Bob and This Transaction has Been Generated by

Alice now alice has Two things to Prove to the Blockchain Network

Alice first has to prove that She Owns These ten Bitcoins so she is able to Pay them to Bob which means that as input

She, also has to Provide the Id of the Block in Which alice Became the

Owner of These ten Bitcoins Say it was Zero Zero seven

And the other Thing that alice has to prove Is that it's actually

Alice who is generating this Transaction and not Somebody Else who is pretending to be to be Alice

for This Purpose She Takes Advantage of A cryptographic

primitive Called Digital Signature so She Basically signs this whole thing With her private key

She then Submits This Transaction

To the Network Any Node That receives This Transaction if it wants to Validate This Transaction it has to perform two

Checks First to Check That alice Actually

Received Ten Bitcoins at some Point in The History of the Blockchain

So if You Remember the Structure of the Blockchain, was something like This and There Is this Head of This Blockchain?

so it will Traverse the Blockchain and

At some Point it will reach the Block

Where Ellis Came Into the Ownership of These ten Bitcoins say it was this One?

so the first Check has Been Passed the other Check that it has to do Is

to Traverse Back in The Blockchain and

Confirm That Alice Actually possesses These ten Bitcoins and

That Up until now alice has not Tried to Pay These ten Bitcoins to Anybody Else Because then that Would be Considered a double Spend

Because Imagine if Alice has Already Paid out These ten Bitcoins to Charlie

Then She's not the current, owner of These ten Bitcoins even Though she, was at. Some Point in the Past

So that's Another Thing that the Node has to confirm that from the point when These ten Bitcoins Came

Into The Ownership of Alice

She did not at Any Point Transfer Them to Anybody Else if The Transaction passes Both These checks then the next

Step is to write it to the Blockchain now this Would be Straightforward in A centralized System

Where There are all trusted Nodes and They'll Just Simply perform the right Operation?

However This is Significantly more Complex in A fully, Decentralized Network like that in The Blockchain

Because all the untrusted or semi Trusted Nodes Have to reach an Agreement Among Themselves

Whether They Are going to write this Piece of Data or transaction to the Blockchain or not

This is where The Issue of Consensus Comes Into Picture

Consensus Simply Means to reach Agreement About A value Among Multiple Nodes Within a network

Now in The case of Bitcoin this Consensus is done

By getting all the nodes To solve A hash Puzzle or Provide some Proof of Work

This is also called Mining and for this Reason Potential Bitcoin leaders are also Called

Miners

a Miner can, also be thought a successful miner Can, also be Thought of as a leader

Because when the miner has successfully solved the puzzle?

It can write to the Blockchain then there are two main issues in Bitcoin?

However Note That Even Though I mentioned These issues in The Context of Bitcoin These are Shared by all Blockchain

Systems That Work, Along the Same Principles as Bitcoin

The first issue Is that of Folks now Bitcoin is Decentralized System and it's a peer-To-Peer Network Where

Different Nodes

communicate Transactions and other Information to each other using a gossip Protocol

Now the Network has its Own Limitations for example Propagation Delays or the transactions Could Simply get lost on its way Or

a node could be simply bad

This Could Mean That

The Nodes in The Network Could Potentially Have Different views of the System what might happen Is

That A minor Builds on Top of this Block

While Another Minor who has not yet Heard About this Block Builds on Top of some other Block the Blockchain has Effectively Been Forked and

Some Nodes will Continue To extend This Part of the Blockchain

While Others Would Continue To mine on Top or extend This part of the Blockchain

This is Really Bad for the Blockchain and it Defies the

Fundamental Philosophy of The Blockchain Which Wants to Provide A consistent view of the World to its Users

So all systems need to have some Mechanism to resolve Such Conflicts in the case of Bitcoin

There Is This Implicit rule that

Nodes Who find themselves in A Fork Situation Should Follow the longest Fork you mentioned before what I heard as A

Gossip Protocol Is that yes What's a gossip Protocol a gossip Protocol

Is most naive Kind of Protocol where for example if There are Five People in the Room and

They want to communicate some Information to each other

Then I'll Tell that Information to as Many People I know in the Room and

All These People will

Also communicate The Same Information to everybody Else in The Room so everybody is talking to everybody Else the other Issue in

Bitcoin Is that of Performance Now There are two key

Metrics That Are used to assess the performance of such Systems, one Is that of Throughput and yes the other Is that of Latency

By Throughput, We mean that what Is the Maximum rate at which the System Can write Transactions to the Blockchain

and by latency we mean that after the point at which a node hears about a new transaction

How Long Does it Take to actually write it to the Blockchain Now in Bitcoin the

Throughput of the System is Basically a Function of

Two Properties of the System - Block Size and the other Is the inter Block Interval

What is a block We've Been Talking about Transactions so far A block Is simply an Extension of that Idea?

You Package a number of Transactions Into a block

So what Gets written to the Blockchain Is not a single Transaction but Rather a block of Transactions

The Size of This Block in Bitcoin is Currently Capped at one Megabytes the Inter Block Interval

Sort of Relates To a Difficulty of the Hashing Puzzle

Because that has to do With how fast Miners Can solve the Puzzle

Currently This Is set at about 10 Minutes and

The idea Is that the Inter Plock Interval Should Be large enough that

Majority of The Nodes in The Network Have Heard About a new Block That has Been Added to the Blockchain

Before Another Block Is Added To it to avoid Folks with the current Block Size of 1 megabytes and

An Inter Block interval of 10 Minutes the Throughput of Bitcoin is at is capped at about

7 Transactions per Second and A client That Submits a, transaction to bitcoin

It has Generally on Average to Wait About six

More Blocks Are Added to the Blockchain to be Sure that it's Block is Actually Permanently Added to the Blockchain

Now this is very slow Just to give you an Idea Main Stream Payment Processing systems like

Visa Can Process Transactions Up to at up to 24,000 Transactions per Second With a latency of Just A few Seconds

Now One might Argue that

Reaper Amat Rising the Inter Block Interval Value and The Size of the Block Maybe

These performance Metrics of Bitcoin Can be Improved

It Turns out According to a recent Study that even Then the best

We can do IS 27 Transactions per Second and a latency of About 12 Seconds People have now Started to look at

Options To Redesign Block Chains to Address These issues of Forking and low

Performance Now Or that the issue of Consensus Is not new it has Been Studied for

Well Over Two decades in Classical Distributed systems and There are

Well Known and well tested protocols that enable?

Agreement Among A group of Nodes

That Can Tolerate Two Kinds of Errors There are Crash Failures and There are Bees and Time Failures the protocols that Are

Well Known for crash Failures are for example raft Paxos and so Forth

By crash Failures

We mean that A node Simply Becomes silent for example because it Crashed and Is not able to actively Participate in the Consensus Protocol

Resent time failures are worse in This case the Nodes might behave arbitrarily or

Inconsistently for Example Sometimes it might exhibit The behavior of Crash Nodes By Becoming silent or?

Sometimes it might Lie about the value on Which Consensus is Required

The Most Popular Protocol for

Tolerating Bees and Time Failures Is called Practical Byzantine fault Tolerant Protocol

Or Pbft so what do These classical Consensus protocols have got to do With Bitcoin or block Change in General

Recall That in Bitcoin the way to reach Consensus, was that A miner?

Solves a Puzzle so Basically it receives The Transaction it does Mining mining Mining

Solves a Puzzle and then Say This is the Blockchain it Gets to write

The Transaction to the Blockchain

Now What Researchers are Currently looking at Is

What About if We replace this leader with a group of leaders so instead of Having one

Leader who is a miner We have a group of leaders?

We're Not Really Mining I mean the criteria for entering this Group, of leaders might be Mining