Vitalik, the famous co-founder of Ethereum, has presented his new idea during a talk live streamed on YouTube: Plasma Cash, an upgraded version of the already existing Plasma.

Plasma itself is an on-chain scaling solution for blockchains, which was developed by Buterin and Joseph Poon who also is the creator of Lightning Network. It is a chain-wide scaling solution which optimizes the data passed to the root blockchain whilst reducing transaction fees for smart contracts and decentralized applications.

Plasma chains are not sharing transaction data with the root chain, only the hash created by the pre-collected transactions – all of them are minimized to a single bit on a bitmap. In case a fraudulent block is submitted, it is refused by the blockchain and the block creator gets penalized. Therefore a huge amount of transactions can be committed on the Plasma chain while the amount of data hitting the root blockchain is fairly low. We have to add that this method only allows for quadratic scaling and that is the main problem here. It is never going to be able to support the exponential growth necessary. Another disadvantage is that every user would need to download all Plasma blocks which also requires a significant amount of resources and time.

The upgraded Plasma version runs under the name Plasma Cash developed by Dona Robinson, Karl Floersch and Vitalik Buterin. This could solve the above mentioned issues, at least that’s what Buterin said. The exponential scaling is going to be reached with the help of a program, which creates a new coin with a unique ID during each deposit. This coin is going to be unique and non-fungible, whilst representing the deposit amount that was made. Also the coin will be identified by its place in the chain. This results in clients not having to download the entire chain of plasma blocks, it is enough to monitor the location of the specific coin which is relevant to to our transaction. This means that clients won’t have to process unnecessary data, as not everyone needs to know all the ongoing transactions. With Plasma Cash, users need to have the proof data of their coin’s history on the Merkle tree, and nothing more.

Vitalik went in detail about security too, the fact that every coin is by definition identified with a specific user, they are not fully fungible or interchangeable: no one can take another user’s coin without the owner of the coin being alerted. This means that the owner of the coin is able to disrupt the fraudulent withdrawal through the complaint system by showing his ‘evidence data’ for the coin’s history. And this could be a real upscale development for cryptocurrency exchanges turning them almost hack-resistant.