Scaling has dominated Consensus 2018, just as it did the three years prior. The \"SCALING, LAYER 2 AND CRYPTOGRAPHIC INNOVATIONS\" panel brought together Alin S. Dragos of MIT Media Lab, Amy Yin from Co
Scaling has dominated Consensus 2018, just as it did the three years prior. The "SCALING, LAYER 2 AND CRYPTOGRAPHIC INNOVATIONS" panel brought together Alin S. Dragos of MIT Media Lab, Amy Yin from Coinbase, Christian Decker of Blockstream, Muneeb Ali of Blockstack, and Eli Ben-Sasson of StarkWave to examine the issue.
Yin opened with Coinbase's push to return fund control to users. The company faced years of criticism for functioning as a Bitcoin intermediary. The industry calls Coinbase a Bitcoin bank; Yin countered that the label better describes BitPay, their main competitor. As Bitcoin's most visible company, Coinbase navigates a hard path between the cypherpunk values embedded in the protocol and the regulatory bodies now scrutinizing its operations. The firm endured backlash when Wikileaks claimed it blocked their account, and later when users reported frozen access after purchasing bitcoin for online gambling. Yin's talk skirted both controversies and the wider community concerns. Her discussion of Hierarchical Deterministic wallets and user autonomy over funds reminded listeners of those same tensions.
Coinbase now provides three products enabling permissionless fund transfers, Yin explained. These include Coinbase Merchants. One limitation: Coinbase controls who can sign up. During Q&A, Yin disclosed that residents of sanctioned countries like Cuba and Iran cannot access the service. The restriction serves regulatory interests. No company aiming to stay in regulators' favor connects itself to embargoed nations, so the decision came as no surprise. The link to scaling appears indirect. Coinbase's wallet solutions don't address scaling by themselves. They do reduce blockchain transactions. If Coinbase can reconcile payment amounts, confirm a transaction before miners verify it, and still allow merchants and users to control their private keys, merchants get smoother operations without every bitcoin coffee purchase clogging the network. The result falls short of satisfying purists who want bitcoin confined to cypherpunk culture, but the approach moves toward progress.
Christian Decker from Blockstream moved to concrete scaling with Lightning Network. He outlined its mechanics without entering complex mathematics. Lightning creates off-chain payment channels between participants. Transactions accumulate and settle on the blockchain in a single batch. Funds lock during this period and can't move elsewhere. Each channel processes about 500 transactions per second, Decker said. With thousands of channels operating simultaneously, Bitcoin could outpace other cryptocurrencies and rival payment networks including VISA.
Decker also stated that Lightning offers better privacy than on-chain transactions. Grouped transactions obscure who sent what to whom. Lightning nodes can access this data but operate without recording it. Decker explained how nodes "take from the left and give to the right," unaware whether their transaction sits first, last, or middle in a chain. A user with multiple channels open becomes impossible to track on the Lightning Network.
Decker presented Mainnet usage stats despite the network remaining in official TestNet status. The network runs 1,706 nodes with 6,564 active channels holding about 20 bitcoins. Exact fee tallies and transaction counts remain unknown since the network can't track them, Decker noted. Transaction fees cost about a millionth of a penny each.
Alin S. Dragos from MIT Media Lab examined smart contracts built on Bitcoin rather than Ethereum, which dominates the space. Dragos discussed oracles as mechanisms for enabling smart contracts and off-chain transactions. He emphasized the need for oracles people can trust and suggested that risk shrinks through oracles unaware they serve the role, such as a stock ticker, or by deploying multiple oracles at once.
Blockstack's Muneeb Ali took a different direction. He contended the industry has no genuine experts and faulted yesterday's hackathon for producing solutions that only work on private databases, not blockchains. Ali shifted focus to distributed database systems built outside the crypto world and urged the audience to borrow those innovations for scaling solutions. The speech surprised some attendees but offered a perspective worth considering.
Eli Ben-Sasson from StarkWave wrapped the discussion with STARK, SNARK protocols deployed by Zcash, and Bulletproof systems. All three use zero-knowledge proofs to obscure individual or grouped transactions. The scaling advantage emerges in verification. On traditional blockchains, each participant must verify every transaction, which slows the network and bloats the chain. Trusting the protocol cuts both transaction time and verification time when using SNARK or STARK. Merchants avoid long waits since the protocol handles verification. STARK beats SNARK by reducing both creation and verification time, and Ben-Sasson said the company plans to drive verification faster than conventional blockchain confirmation. STARK also resists quantum computing, something the other methods can't match. Ben-Sasson closed by clarifying the firm isn't launching an ICO.
Block size expansion never appeared in the discussion, a topic Roger Ver would have advocated for.
