Solving the Trilemma: RSK’s Contributions to Interoperability, Scalability & Security
Some of the major problems limiting the mass adoption of blockchain technology are interoperability, scalability and security. Any blockchain willing to support Web 3.0 and the Metaverse, must be interoperable with other blockchains and provide reasonable transaction times at affordable costs.
On this blog post, we´ll review different solutions in the blockchain space to solve the blockchain trilemma and RSK’s contributions to the ecosystem.
Index
Why Blockchain Interoperability Matters?
Interoperability: Some Blockchains Tackling the Problem
RSK
Cosmos
Polkadot
Current Limitations of Blockchain Interoperability
The Scalability Trilemma
Why is it Difficult to Scale Bitcoin?
Solutions to the Bitcoin Scalability Problem So Far
Layer One Scalability Solutions
Sharding
Segregated Witness
Layer Two Scalability Solutions
State Channels
Sidechains
Plasma
Lightning Network
Scalable Consensus Mechanisms
Delegated Proof-of-Stake
Proof of Authority
Byzantine Fault Tolerance
Scalable Distributed Ledgers
Security on Bitcoin’s Blockchain
How Secure is the Bitcoin Blockchain?
Security Attacks on the Bitcoin Network
Double Spending
51% Attacks
Transactions Malleability
Quantum Computers
Improvements on Bitcoin’s Security
Taproot Upgrade
SegWit Implementation
Interoperability, Scalability and Security on Bitcoin: What Can We Expect in 2022?
RSK and Interoperability
RSK and Scalability
RSK and Security
Why Blockchain Interoperability Matters?
The recent adoption of blockchain technologies in different industrial applications requires interoperability. According to a ConsenSyS report, consumers interacting with Web3 must experience a seamless interaction regardless of what browser, wallet, or website they are using for the technology to scale to mass adoption.
Blockchain interoperability is also essential for mainstream corporate adoption of blockchain solutions. For instance, a patient´s medical records on one specific blockchain might also be required by another service or corporation on a different blockchain. Interoperability is indeed a must-to in order for blockchain technology to scale as the near future depicts several blockchains interacting in real time.
There is no single blockchain on Web 3.0 but rather a symphony of blockchains exchanging information and consuming services on each other. On this context, scalable interoperability is without a doubt the most important requirement of blockchain technology.
Interoperability: Some Blockchains Tackling the Problem
Interconnecting existing blockchains is not easy, especially considering that most blockchains compete with each other. However, several projects have focused on interoperability as the only way to boost and speed up blockchain adoption is through collaboration rather than competition. Let´s go over some examples:
RSK
RSK offers two major solutions to facilitate interoperability: RIF Gateways and the RSK-ETH Bridge.
RIF Gateways has an extensive range of blockchain interoperability protocols that allow a secure and fast connection to other blockchains. The protocols also offer developers a way to develop solutions that will enable the RSK ecosystem to connect with other blockchains easily.
At the core, RIF Gateways provides an interface layer that allows seamless access to cross-chain integrations and oracle services. The network also offers blockchains an implementation-agnostic protocol for internal and external data consumption.
On the other hand, the RSK-ETH token bridge is a cross-chain interoperability bridge that allows users to convert their tokens from Ethereum to RSK and vice versa. The RSK network itself is pegged to the Bitcoin network with PoWPeg so users can convert their RBTC to BTC directly. Therefore, the RSK-ETH bridge lets users swap tokens between two public blockchains (Bitcoin and Ethereum) without any intermediary.
Cosmos
Cosmos leverages cross-chain technology. It uses an inter-blockchain communication (IBC) protocol to connect both public and private blockchains and allow interoperability. The IBC protocol acts as a TCP/IP-like messaging protocol between blockchains. The Cosmos architecture includes several independent blockchains called zones attached to a central blockchain known as the Hub.
For pioneer blockchains like Bitcoin that don’t support IBC by design, they are attached to the Cosmos Hub through the Peg Zones. The Hub binds all the zones together and coordinates communication between the zones using standardized languages. The interconnection between several blockchains allows users to send tokens from one zone to another securely and in real-time without using a third party.
Cosmos and its Tendermint proof-of-stake protocol has been adopted by several projects in the blockchain space and can definitely facilitate the interaction of different blockchains at affordable costs.
Polkadot
Polkadot was created since inception to provide a relay chain where different blockchains can interact seamlessly and simultaneously through parachains. In order to secure a parachain lease, projects need to bid/lock enough DOTs and the community is allowed to contribute in the parachain auctions through the crowdloan module in exchange for tokens to be delivered along the parachain lease period (usually 96 weeks) with a vesting scheme.
By design, Polkadot sets a playing field where different blockchains can operate regularly without compromising the network scalability while at the same time interacting at affordable rates through XCMP.
Current Limitations of Blockchain Interoperability
The current most significant limitation of blockchain interoperability is that most blockchains are completely different (consensus protocols, coding languages, block times, transaction finality confirmations, etc). This makes interconnections (interoperability) between networks quite challenging and is the most important problem to be solved in the near future for Web 3.0 to fully unleash its potential.
The Scalability Trilemma
The Scalability Trilemma states that no single blockchain can possess the three desirable components of an ideal blockchain: decentralization, security and scalability. According to the trilemma, a blockchain can only optimize two of these variables.
On Bitcoin, decentralization and security have always been the cornerstones of the network whereas scalability has been improved in the recent years through proposals like Lightning Network, Taproot and a few others that we´ll analyze.
Why is it Difficult to Scale Bitcoin?
The two major scalability challenges of the Bitcoin blockchain are the block size and the response time. The on-chain processing capacity of the Bitcoin blockchain is limited by the original block size limit of 1Mb and an average block creation time of 10 minutes.
The Bitcoin block limit size of 1Mb was introduced as a security measure to prevent potential attacks on the network and to enable truly decentralization of the fully validating nodes. While this is a great security measure which also boosts decentralization, it reduces the transaction throughput of the network. The current block limit can support around three to seven transactions per second. Combined with the average block creation time of 10 minutes, this greatly limits the network’s capacity to process thousands of transactions per second.
Just like interoperability, scalability is a challenge that needs to be solved for any blockchain network willing to be used by mainstream on a daily basis. Congestion and expensive fees has been the norm in the last two years on Ethereum and Bitcoin preventing more users to use the network.
Solutions to the Bitcoin Scalability Problem So Far
Currently, there are several options that are addressing Bitcoin´s scalability issues with different technologies. Here are the four distinct categories of solutions:
- Layer One Scalability Solutions.
- Layer Two Scalability Solutions.
- Scalable Consensus Mechanisms.
- Scalable Distributed Ledger.
Layer One Scalability Solutions
Layer one scalability solutions and on-chain scaling solutions focus on improving the Bitcoin network’s features and traits, such as reducing the verification time or increasing the block size. This section will cover the popular layer one solutions.
Sharding
The sharding approach to blockchain scalability is to parallelize the blockchain. It divides the blockchain into smaller and easily manageable parts – the shards – and then runs these shards in parallel to each other.
These smaller pieces then take care of the different transaction processing and increase processing output across the network. Sharding essentially removes the challenges of depending on individual node speeds.
To reduce the risk of the single-shard takeover attack, nodes in a sharded blockchain take on different roles: proposers and validators. Proposers are in charge of marshaling transactions and creating collations while validators are in charge of verifying these collations and reaching consensus. Validators are randomly selected and shuffled at the end of every round.
Sharding is considered complex and requires a cautious partitioning design mechanism to ensure that all shards are completely decentralized and avoid single-shard takeover attacks. The single-shard attack arises when a single entity can easily control the shard.
Another challenge is inter-shard communication. If cross-shard communication becomes too often, it might actually become less efficient than a non-sharded blockchain.
Segregated Witness (SegWit)
Segregated Witness (SEGWIT) is a protocol improvement of a blockchain that involves modifying the data storage structure. The solution was initially designed to fix transaction malleability – a bug in the original encryption technology that allows hackers to change wallet addresses and payment amounts in transactions.
Bitcoin´s SegWit paved the way for the development of the Lightning network, a layer 2 scaling solution.
Layer Two Scalability Solutions
Layer two scalability solutions refer to a secondary protocol developed on top of layer one. As the name implies, they perform transactions off-chain but are still secured by the main blockchain network.
State Channels
State channels offer two-way communication between blockchain networks and off-chain transaction channels to improve transaction speed and capacity. They serve as off-chain resources that process transactions and are integrated into the network with smart contracts or multi-signature mechanisms.
At the end of a transaction or group of transactions on the state channel, the blockchain then documents the final “state of the channel” with the associated transactions.
Sidechains
Sidechains are one of the top choices when it comes to Bitcoin scalability solutions. A sidechain acts as a transactional chain adjacent to the main blockchain. Although the sidechain is built on top of the main blockchain, it uses an independent consensus algorithm from the main network. That way, the sidechain can optimally achieve improved speed and scalability.
Sidechains usually use utility tokens to transfer data between the sidechain and the main chain. In the case of sidechains, the main chains only need to focus on maintaining blockchain security and dispute resolution. Security breaches on the sidechains don’t affect the main chain or other sidechains.
Also, the sidechain transactions are publicly documented on the public ledger. An example of a sidechain is the RSK Protocol which´s a sidechain on top of Bitcoin´s network.
Plasma
Plasma uses child chains that originate from the original blockchain and serve as an independent blockchain. Each child chain processes its transactions independently but benefits from the security of the parent blockchain. This independent operation of the different sidechains provides speed and efficiency optimization that helps scalability.
Lightning Network
The Lightning network focuses on offering faster transactions with cheaper processing fees. It is a decentralized off-chain scalability solution designed to eliminate the risk of delegating funds custody to third parties.
The Lightning Network reduces the load on the main Bitcoin blockchain by taking on some of the transactions. That way, users don’t have to wait longer for block confirmation or pay higher transaction fees. The LN also allows users to set up payment channels with a payment partner without using a multi-sig wallet.
The network works by creating a peer-to-peer payment channel between two parties that want to transact. The two partners can interact numerous times, but the transaction is only recorded on the main blockchain when the channel is opened and closed. The channel acts as a little ledger for the transactions between the two parties without affecting the Bitcoin network. Once the channel is closed, all transactions from the ledger are recorded on the blockchain at once.
Scalable Consensus Mechanisms
Scalable Consensus Mechanism solutions are designed for streamlining the process of achieving consensus. That way, they can provide improved scalability and transaction throughput.
Delegated Proof-of-Stake
The Delegated Proof-of-Stake (DPOS) consensus mechanism is similar to the democratic political system. With DPOS, token holders are in charge of selecting validators on the network and vote out underperforming validators or ones that are malicious against the system.
DPOS blockchains are partly centralized because a finite number of validators are responsible for the production of blocks. Under a DPOS proposal, scalability and affordability are the most important aspects whereas decentralization is clearly relegated.
Proof of Authority
Proof of Authority is a scalable consensus mechanism that focuses on a reputation-based consensus model. Selected nodes work as the system administrators to dictate the state of transactions on the blockchain. Validators are selected based on their reputation after a comprehensive screening process. Hence, participants have to stake their authority to become validators.
Byzantine Fault Tolerance
The Byzantine Fault Tolerance (BFT) consensus mechanism is a trusted instrument for addressing Byzantine General problems. The BFT consensus can help to overcome the possibility of Byzantine nodes. Byzantine nodes are traitor nodes that can mislead or lie to other nodes in the consensus protocol. The BFT consensus helps to reduce the impacts of malicious nodes and protect the network from dangerous system failures.
There are three distinct variants of the BFT consensus mechanism:
- Practical Byzantine Agreement.
- Federated Byzantine Agreement.
- Delegated Byzantine Fault Tolerance.
The Delegated Byzantine Fault Tolerance (DBFT) is a popular blockchain scalable consensus mechanism with real-life implementation. The DBFT operates like the democratic process in a country as token holders and ordinary nodes all have the right to vote for delegates. The delegates are randomly selected to verify and validate transactions.
Scalable Distributed Ledgers
Distributed Ledgers Technology is a system that lets users and systems record transactions as related to an asset. It stores information on multiple locations simultaneously at a particular time. The blockchain is one of the subsets of the DLT.
Scalable distributed ledgers like Directed Acyclic Graphs (DAGs) can enable the processing of an unlimited number of transactions and, in turn, offer a better solution to scalability.
Security on Bitcoin´s Blockchain
The Bitcoin blockchain is based on a peer-to-peer (P2P) network and a probabilistic distributed consensus network. Electronic payments are made by generating transactions that transfer bitcoins from one party to another. The destination address is generated with a series of irreversible cryptographic hashing operations on the user’s public key. This gives the wallet address a level of anonymity and security. The network uses the miners to validate transactions to verify a transaction’s integrity, authenticity and correctness.
One question remains to be answereed though: how secure is the Bitcoin network?
How Secure is the Bitcoin Blockchain?
Bitcoin is currently the most secure blockchain in the world. The cryptographic fingerprint and the consensus protocol make the blockchain secure and tamper-proof. The cryptographic fingerprint, the hash, requires huge computing time and energy to generate. That way, it serves as proof that the miners that generate the block did the work (Proof-of-Work).
The consensus protocol verifies whether the hash matches the block before it is added to the blockchain. Only after verification, will the other nodes add the block on their blockchain.
The Bitcoin blockchain is secure primarily by the verification and hash generation process. To change an entry in any ledger, you must calculate a new hash for that block and all other subsequent blocks in the chain. You must do this faster than any other nodes that can add more blocks to the chain. Hence, unless you have more processing power than the rest of the nodes combined, the network will automatically reject your alteration. Even at that, you still need 51% of the mining power to approve your transactions. This is what makes the Bitcoin blockchain tamperproof or immutable even though the theoretical 51% attack alternative exists at great cost.
Security Attacks on the Bitcoin Network
Although the Bitcoin network is very secure, people have found creative ways to cheat and try to hack into the system before. Besides, the bitcoin protocol security doesn’t extend to the sites and services that deal in Bitcoin. Here is a quick rundown of some notable instances of security concerns on the Bitcoin network.
Double Spending
Double spending is when a user attempts to trick the blockchain into spending the same Bitcoin twice. The first way is to send the same bitcoins in different transactions, sending two conflicting transactions in rapid successions.
The other way is to pre-mine one transaction into a block and spend these same coins before releasing the block to the blockchain. This is called a Finney attack. However, the computing power required to mine bitcoins makes it less productive and almost impossible.
51% Attacks
The Goldfinger attack is exactly a security attack; it is more of a weakness – a dangerous one. Theoretically, it can happen when an adversary controls more than 50% Hashrate of the network. If that happens, the advantage in computing power can be used to commit frauds like double-spending or fork the main transactions.
Transaction Malleability
Transaction malleability refers to a bug in the original Bitcoin protocol. Malleability is defined in cryptography if an output (A) can be mauled to another output (A’) by an attacker unaware of the cryptographic secrets used to develop A.
Therefore, Transaction Malleability refers to when an attacker can change the transaction amount and wallet address of a transaction without accessing the sender’s private key. The SegWit protocol was used to address this issue.
Quantum Computers
Quantum computers use quantum physics properties to store and perform computations and solve problems. They can solve complex computational problems in seconds and can vastly outperform even the best supercomputer.
This poses a threat to the algorithm that secures the Bitcoin network. Can they break the cryptographic algorithm?
The answer is simply no. According to research at the University of Sussex, to investigate the computing power, you need to break the Bitcoin network: “Breaking bitcoin’s encryption in a 10-minute window would require a quantum computer with 1.9 billion qubits while cracking it in an hour would require a machine with 317 million qubits. Even allowing for a whole day, this figure only drops to 13 million qubits.”
That is not feasible at the moment because even IBM’s record-breaking superconducting quantum computer only has 127 qubits.
Improvements on Bitcoin´s Security
Taproot Upgrade
The Taproot Upgrade is the first Bitcoin upgrade in the past four years. It was implemented in November 2021. The network formerly used the “Elliptic Curve Digital Signature Algorithm,” created from the private key. The Taproot switches this to the Schnorr signatures, making multi-signature transactions unreadable.
In reality, this means more privacy for you because your keys won’t have as much exposure on the network as before. The update is also a game-changer for smart contracts on the blockchain. Taproot makes smart contracts cheaper and smaller on the Bitcoin blockchain.
SegWit Implementation
The SegWit – Segregated Witness (Consensus Layer) – BIP (Bitcoin Improvement Proposal) was implemented in August 2017 to resolve the Bitcoin malleability bug. Although the adoption of the SegWit is far from complete, it has resolved the malleability bug and helped the Lightning Network development.
The RSK Network’s contributions to the Interoperability, Scalability and Security of Bitcoin
RSK and Interoperability
The RSK protocol is fostering Bitcoin interoperability in two major ways: RIF Gateways and the RSK – ETH token bridge.
RIF Gateways
RIF Gateways proposes an interface layer that provides access to cross-chain integrations and blockchain oracle services. It creates a bridge between distributed ledgers enabling data providers to benefit from secure and standardized data transfer.
RIF Gateways is also integrated with Chainlink Oracles. This integration means that developers have ready access to oracle infrastructure for connecting their dApps to off-chain resources.
The RSK – ETH Token Bridge
The RSK-ETH token bridge is a major interoperability solution between the Bitcoin and Ethereum networks. The token bridge can be used via dedicated applications or the bridge powered by smart contracts on the original chain. RIF Gateways and the token bridge have opened several ways for the adoption of blockchain solutions. RIF Gateways aims to leverage the existing research on interoperability and compress all that info into a comprehensive API that anybody can easily use.
RSK and Scalability
The RSK network is also actively involved in building Bitcoin scalability solutions. One way the RSK ecosystem is actively trying to do this is through Unitrie. The Unitrie upgrade is a one-of-a-kind upgrade system that improves decentralization and full-node performance. You can read all about it here.
RSK and Security
The RSK ecosystem is secured by the Bitcoin blockchain making it one of the most secured smart contract platforms. The recent Taproot upgrade has made it easier and safer to work with smart contracts on the Bitcoin blockchain through RSK. The upgrade is also paving the way for more innovative ways to improve the security of the Bitcoin network.