The “Scaling Bitcoin” conference took place in Tokyo on Friday. Mark Friedenbach former developer of Blockstream presented a groundbreaking concept for Bitcoin. “Forward blocks” are designed to allow future, controversial changes to Bitcoin to be made, such as increasing the block size or changing the proof of work, without having to perform a hard fork. The “Forward Blocks” solution would make it virtually obsolete for every node in the Bitoin network to update its software.

[EDIT] We received an email from Blockstream representative informing us that Friedenbach is not a member of their company anymore. “This is not accurate because Mark Friedenbach is no longer at Blockstream, and the concept was conceived and presented independently. “

The question of how to make changes to the Bitcoin protocol has been a major contentious issue for several years. Last but not least, the “blocksize war” has shown that it is extremely difficult to reach consensus in a huge distributed system like Bitcoin. While one camp was for increasing the block size (the “Bitcoin Cash camp”), the other camp wanted to leave the Bitcoin block size at one MB and scale the Bitcoin block chain “off-chain” (e.g. by Lightning). The consequence of the dispute was the Bitcoin Cash Hard Fork last year.

Another important issue was that control over one’s own BTC is weakened when there are forced software changes. That’s why Mark Friedenbach of Blockstream has been looking for a solution that makes it easier to make major changes to Bitcoin without implementing a hard fork. However, some critics also argue that drastic changes to a distributed network like Bitcoin will be extremely difficult.

While Adam Back, CEO of Blockstream, cautiously described the proposal as “fairly simple but interesting,” Karl-Johan Alm, a Bitcoin core developer, said that the proposal meant a “massive technological breakthrough.

How does “Forward Blocks” work?

Friedenbach explained that forward blocks allow different blockchains with separate proof-of-work functions. This means that there is not only a single blockchain in which each block can be written, but numerous blockchains. The idea is similar to the Sharding of Ethereum in that the blockchain is divided into parts (“shards”). Friedenbach’s forward blocks would also split the data of the Bitcoin blockchain into different parts, further blockchains. These “forward blockchains” are basically not connected to each other and store their own transactions separately. However, there should be a synchronization possibility between these (both) shards. Friedenbach explained this:

One of the methods is sharding. I’m talking about database sharding. If we can have a forward blockchain, we could just as easily have 30 and have transactions separate from them, so that each shard has its own UTXO set […]. The information in one shard is not linked to what happens in other shards. There must be a way to transfer something between the shards, and there are some synchronization requirements, and it’s the same mechanism we used for the coinbase rules earlier.

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The following statement from Friedenbach also makes it very clear what the intention of forward blocks is. If no consensus is reached on a change to the Bitcoin protocol, then nodes that do not upgrade to the upgrade can continue to participate in the Bitcoin block chain. They will then only become a “shard”.

The so-called soft fork-alternative implies a strengthening of the consensus rules, where old nodes still get the progress of the blockchain. The research also includes a definition of forward-compatible soft forks so that non-updated nodes can still receive and process all transactions.

Here’s a snippet from the paper that does a great job summarizing a lot of the potential improvements:

We demonstrated that the idea of forward blocks provides a unifying mechanism that: • Provides on-chain settlement scaling of up to 3584x current limits as a soft-fork; • Provides for an (optional) proof-of-work upgrade as a soft fork; • Limits growth of validation costs with a flexible weight limit; • Decreases centralization risks through the adoption of sharding; and • Provides a framework for ledger accounting in future protocol extensions including but not limited to: – A rebatable fee market with consensus-determined transaction clearing fee rates; – Confidential transactions for obscuring transaction amounts; – Mimblewimble, ring signatures, or anonymous spends for obscuring the spend graph; and – Sidechain value-transfer mechanisms. While there are many moving parts to this proposal, it is not beyond the level of complexity of prior extensions adopted by bitcoin (e.g. segregated witness), and achieves a variety of benefits comparable in magnitude.

It remains to be seen whether this proposal will be accepted by the entire Bitcoin community. However, it will certainly be discussed very controversially.

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