IOV Labs Plans To Solve Bitcoin’s Scalability Issues
Scalability has always been an issue when it comes to blockchain technology. High network congestion has been a massive issue and is yet to be solved. Although many companies are working on a different set of scalability solutions, this problem represents a big challenge. There are two significant issues that set back the most popular cryptocurrencies, such as Bitcoin and Ethereum. The first one would be the time it takes to enter a transaction in the block and the second the time that it takes to reach consensus for a said transaction.
The most popular cryptos in the world follow a Proof of Work (PoW) consensus model, where miners use their computational power to solve a specific cryptographic puzzle, and when successful, obtain a block reward. This, of course, takes time, and the more complicated the puzzle is, the more time it will take to solve the problem.
Let’s take the bitcoin network, for example, where the block size is limited to 1MB, which reduces the number of transactions that can be entered in a single block. This converts miners into a bottleneck for the operation, which greatly delays the transaction.
As for the Ethereum network, even though it is not limited to a 1 MB block size, it’s limited to a gas limit. Gas is the amount of computational power that is needed to process certain transactions or smart contracts. This limitation means that miners can only add transactions that comply with the gas requirements of the block, again limiting transaction volume.
Both networks also have a consensus mechanism to reach decisions. The process is based on a verification system throughout the network, where confirmation must be acquired for the transaction to be approved. This process can take anywhere from minutes to hours, depending on how busy the network is.
Given that there are important issues in the most popular blockchain networks, it makes sense for companies to try and develop workable solutions to address these problems. One of the companies working to solve this issue is IOVLabs, which developed RSK. This sidechain adds smart contract capabilities on top of Bitcoin’s network and enables developers to create, import, and deploy smart contracts using the hashing power of the most secure blockchain. So how can RSK contribute to the scalability problem?
Many companies in the industry are developing a solution based on layer-2 scalability. What this means is that a state channel will be created to set a two-way communication channel between participants, enabling real-time communication and exponentially decreasing the transaction time by eliminating third parties associated with the transaction chain.
Through the development of its own smart contract platform known as RSK, which connects to Bitcoin’s blockchain through sidechain technology, IOVLabs provides a bridge for developers to create apps compatible with Ethereum while also enjoying Bitcoin’s security. At its very core, RSK is a combination of:
- A Turing-complete resource-accounted deterministic virtual machine (for smart contracts) is compatible with Ethereum’s EVM.
- A two-way pegged Bitcoin sidechain (for BTC denominated trade) based on a strong federation.
- A SHA256D merge-mining consensus protocol (for consensus security relying on Bitcoin’s miners) with 30-seconds block interval. (for fast payments).
As part of its blockchain initiative, the company has developed the RIF Lumino Network ecosystem, which is a set of protocols whose primary goal is to enable fast and cheap peer-to-peer payments that could scale to achieve real worldwide financial inclusion. This will facilitate the use of blockchain technology by making it as simple for everyone as possible. RIF Payments is composed of three main protocols:
- RIF Payments Full: it is a protocol that creates an abstraction layer to access different payment networks allowing cross-token and cross-network payments.
- RIF Payments Light: it is a protocol to allow light clients to access RIF Payments Full without jeopardizing security and decentralization.
- RIF Payments Exchange: this protocol will be used to discover intra-token exchange rates, optimizing the routing of payments to a great extent, selecting the nodes to route payments based on their scoring, exchange rate, and fees, among other criteria.
RIF Lumino Network is the first off-chain state channel network launched by IOV Labs. It is also a cornerstone of a broader vision called RIF Payments, which will allow users to seamlessly interact with multiple cross-blockchain off-chain networks such as Lumino, Lightning, and Raiden. RIF Lumino Network sends transactions and smart contract details over state channels, through the RSK network.
RIF Lumino allows making off-chain payments on any token deployed on RSK with low fees and secured by the Bitcoin network. RIF Lumino Network will be the first payment network supported by RIF Payments in his path to a global financial inclusion.
Through the establishment of this ecosystem, RIF Lumino Network could easily solve both of the major issues that the Bitcoin and Ethereum network currently face. Building upon the strengths of the security that the bitcoin network provides, and the flexibility that the ethereum network adds, RIF is set to become a major component for developers all around.
RIF Labs / IOV Labs: https://iovlabs.org
RIF OS platform: https://rifos.org
RSK platform: https://rsk.co
Disclaimer: The information presented here does not constitute investment advice or an offer to invest. The statements, views, and opinions expressed in this article are solely those of the author/company and do not represent those of Bitcoinist. We strongly advise our readers to DYOR before investing in any cryptocurrency, blockchain project, or ICO, particularly those that guarantee profits. Furthermore, Bitcoinist does not guarantee or imply that the cryptocurrencies or projects published are legal in any specific reader’s location. It is the reader’s responsibility to know the laws regarding cryptocurrencies and ICOs in his or her country.