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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

TECHNOLOGY

12 mins ago | Jamie Redman (https://news.bitcoin.com/author/jamieredman/) | |

‘7 Million Transactions a Second’ — Research Paper Declares 1TB


Blocks Feasible

(https://news.bitcoin.com/wp-content/uploads/2017/12/fahhdh.jpg)

This week a research paper was published by the founder of Lokad, a quantitative
supply chain software company, and it details how terabyte blocks (TB) implemented
into the bitcoin cash (BCH) blockchain could be “feasible both technically and
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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

economically.”

Also Read: Thomson Reuters Adds Bitcoin Cash to Eikon Platform


(https://news.bitcoin.com/thomson-reuters-adds-bitcoin-cash-to-eikon-platform/)

Research Paper Describes How Terabyte Blocks


Could be Applied to the Bitcoin Cash Network
On Sunday, December 17 the researcher and founder of Lokad,
Joannes Vermorel, published a paper called “Terabyte Blocks for
Bitcoin Cash.”
(http://blog.vermorel.com/journal/2017/12/17/terabyte-blocks-
for-bitcoin-cash.html) Vermorel argues that the original Bitcoin
whitepaper (https://bitcoin.com/bitcoin.pdf) describes a system
where it can achieve extremely large blocks that follow alongside Lokad founder, Joannes
Vermorel.
the path of Moore’s Law. The concept of Moore’s Law means every
two years technology gets more advanced within the integrated
circuit and transistor production environment. Vermorel’s paper explains that terabyte
blocks could work while also being economically sound. Further, the transaction output
of a terabyte block could contain around 4 billion Bitcoin Cash transactions, according
to Vermorel’s research.

“Assuming a worldwide population of 10 billion humans, terabyte blocks o er about 50


transactions per human per day,” explains Vermorel’s paper.

50 transactions per day per human appears su cient to cover


all human-driven activities; and only a healthy machine-to-
machine market would require an even greater number of
transactions.

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1TB Blocks Can Work Using Existing Hardware and


Software
Vermorel also goes into great detail on how a mining rig could be built to process 1TB
blocks by utilizing “a combination of existing and proven hardware and software
technologies.” Moreover, the cost associated with the mining rig is considerably low
enough to ensure a healthy decentralized ecosystem, Vermorel explains. The researcher
also describes how the nancing of terabyte system could work, and assumes the upper
bound monetization for a terabyte blockchain is around $0.5 USD per year per user.
Vermorel believes his monetization estimate is conservative.

In 2016, Google is extracting about 7 USD per user per year, while Facebook is extracting
about 16 USD per user per year — If Bitcoin reaches 1TB per block, a large portion of the
world economy will be running on top of this blockchain o ering numerous
monetization opportunities.

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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

I fail to see why, collectively, the market would not manage to


extract at least 5 USD per user per year on average through
blockchain related services. At this point, we are entering the
realm ofWallet
pro (https://www.bitcoin.com/choose-your-wallet/bitcoin-com-wallet)
tably funding a thousand
(https://www.bitcoin.com/) BTC
more
BTC/USD copies of themenu
BCH/USD
Miami $3876
$15936
terabyte blockchain.
(https://price
(https://price
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bitcoin com/)

7 Million Transactions Per Second


Vermorel also goes into various points and issues that would be tethered to scaling a
terabyte blockchain, including scaling transaction propagation, cryptographic validation,
and economic validation. The paper explains that based on Vermorel’s studies, terabyte
blocks could scale to far more than the current 1MB block size that only allows for 3-4
transactions per second.

Throughout 2016 and 2017 bitcoin core (BTC) blocks have been filling up which has led to transaction throughput
congestion.
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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

“Terabyte blocks represent 7 million transactions per second — An optimized


implementation only requires two reads, and two writes per transaction to the persistent
UTXO storage,” explains Vermorel.

The paper details that at the moment terabyte block gures are “wildly unrealistic” but
Vermorel believes the Bitcoin ecosystem will take at least ve years until terabyte blocks
are needed.

“Since the publication of the original Bitcoin paper 8 years ago, practically every cost
quoted in this document has been reduced by a factor greater than 10 — The cost of
long-term data storage is already anticipated to be divided by 3 by 2020 — The
bandwidth cost is also expected to decrease by 30% per year for the coming years as
well,” the terabyte block size paper reveals.

I am not accounting for any additional software improvements


— Flexible Transactions and Schnorr signature could reduce
the transaction size by more than 20% — Pruning the
blockchain itself could probably halve the amount of storage
actually needed.

Recent 1GB Block Size Testing


The paper follows the latest tests by the Bitcoin Unlimited team who have recently
experimented with 1GB block sizes on a testing network. This year on October 13, the
(BU) chief scientist Peter Rizun announced (https://news.bitcoin.com/gigablock-testnet-
researchers-mine-the-worlds- rst-1gb-block/) the team had successfully mined a 1GB,
which provided signi cant transaction throughput results. With these test results, and
Vermorel’s research paper, terabyte blocks for the Bitcoin Cash network may not be an
outlandish concept; especially when Vermorel’s analysis assumes no decrease in
hardware costs, no software breakthroughs, and utilizes existing technologies.

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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

What do you think about terabyte blocks for the bitcoin cash blockchain? Do you think
it is technically and economically feasible? Let us know what you think about
Vermorel’s paper in the comments below.

Images via Shutterstock, Joannes Vermorel’s blog, Woobull.com (http://Woobull.com),


and Our World In Data.

Need to calculate your bitcoin holdings? Check our tools


(http://tools.bitcoin.com/) section.

(https://news.bitcoin.com/author/jamieredman/)
Jamie Redman (https://news.bitcoin.com/author/jamieredman/)
Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency
community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written
hundreds of articles about the disruptive protocols emerging today.

 (https://www.facebook.com/jamie.redman.374)  (https://plus.google.com/u/0/105544450670786353264/posts)

 (https://twitter.com/jamieCrypto)

MARKETS AND PRICES

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1 hour ago | Samuel Haig (https://news.bitcoin.com/author/samuelhaig/) | |

Markets Update: Bitcoin Cash Rallies to $4000 — While BTC Markets


Dip

(https://news.bitcoin.com/wp-content/uploads/2017/12/Untitled-design-34.jpg)

Bitcoin Cash (BCH) has experienced dramatic bullish action recently, gaining over
100% against USD in just three days. As of this writing, BCH is consolidating at
approximately $3,800 after breaking above $4,000 for the rst time ever. BCH’s bullish
momentum has coincided with a more than 20% drop in the price of bitcoin core
(BTC).

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Also Read: Investors Call Foul Play as Coinbase Parries Insider Trading Accusations
(https://news.bitcoin.com/investors-call-foul-play-coinbase-parries-insider-trading-
accusations/)

Bitcoin Cash Establishes New All-Time High


Today, BCH shattered its previous USD price record of $2,800. Bitcoin Cash quickly
generated momentum and spiked upward by more than 40% from $2,800 to set a new
all-time high of over $4,100 on Bit nex. As of this writing, Bitcoin Cash comprises the
third largest cryptocurrency by market capitalization, boasting a total market cap of
approximately $68.7 billion. Bitcoin Cash is currently trading for approximately $3,700
after establishing a local top at the 1.618 Fibonacci extensions from BCH’s mid-
November rally.

Bitfinex BCH/USD – Daily

The bitcoin cash rally, however, has not occurred without controversy
(https://qz.com/1161391/bitcoin-cash-bch-price-spike-leads-to-coinbase-insider-
trading-probe/). Earlier today, Coinbase and Gdax announced the introduction
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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

(https://blog.gdax.com/bitcoin-cash-trading-now-available-on-gdax-a853356bd89c) of
full support for bitcoin cash, seemingly out of the blue. The markets launched in “post-
only mode” – meaning that traders were not able to execute orders that were not
immediately matched, which was intended to give the opportunity to for liquidity to ll
the order books of the new markets in order to restrict dramatic price volatility. An hour
later, Gdax removed the “post-only” restriction, leading to a sharp price spike caused by
demand for BCH exceeding supply. Coinbase quickly reacted by reinstating the “post-
only” restraints two minutes later, citing “signi cant volatility” as the catalyst for the
decision. Before BCH trading was halted an hour later, Gdax posted a price high of
approximately $9,500 USD.

Gdax later announced (https://twitter.com/GDAX) that its


Bitcoin Cash markets are scheduled to resume at 9 am PT
on December 20th. Since relaunching, the BCH pairs have
been restricted to “post-only mode,” with the restrictions
expected to be removed in the next hour. Speculation has
emerged that the secrecy surrounding the introduction of the new trading pairs may
have created the potential for Coinbase and Gdax employees to engage in insider
trading (https://news.bitcoin.com/investors-call-foul-play-coinbase-parries-insider-
trading-accusations/) leading up to the launch. Coinbase has responded to accusations,
stating (https://blog.coinbase.com/our-employee-trading-policy-at-coinbase-
1d4e860b7837) that the exchange “maintains a strict trading policy and internal
guidelines for employees. Coinbase employees have been prohibited from trading in
Bitcoin Cash for several weeks.”

Bitcoin Loses Over 20% Since Setting Recent Record


High
During the last 5 days, the price of bitcoin has dropped by approximately 20% across
major exchanges, after setting a new all-time high on the 16th of December. On Bit nex,
the price established a new record high of $19,891 USD, before dipping to test support
at $15,700 earlier today. Bitstamp has seen slightly more conservative price action,
setting a top of $19,666 and a local bottom of roughly $15,800 USD. Coinbase saw

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21/12/2017 '7 Million Transactions a Second' — Research Paper Declares 1TB Blocks Feasible - Bitcoin News

among the most aggressive price action, dipping from a high of approximately $19,850
by roughly 30% to the $14,000 area. As of this writing, bitcoin is trading for
approximately $16,750.

Coinbase BTC/USD – 4 HR

Looking at the weekly chart, the stochastic RSI appears to be weakening, suggesting that
a larger retracement across the BTC markets could occur should the current trendline
fail to hold. Transversely, the daily charts RSI indicates that the markets may be oversold
– suggesting that the markets could ramp back up to test the all-time high should the
markets successfully establish support at the $16,000 area.

Major Altcoins Set Record USD Highs During BTC


Dip
Several major altcoins have continued to set record highs when paired against the dollar
in recent days, despite the loss of value in the BTC markets. As of this writing, Ethereum
(https://coinmarketcap.com/currencies/ethereum/) is consolidating above $800, after
setting a new high of approximately $840 on the 18th of December. Litecoin

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(https://coinmarketcap.com/currencies/litecoin/) also set


an all-time high on the 18th of December, ramping up to
test the $370 USD area, with LTC prices currently
consolidating above $300 despite Litecoin founder Charlie
Lee’s announcement that he sold
(https://news.bitcoin.com/litecoin-creator-charlie-lee-
reveals-he-sold-all-his-litecoin/) all of the LTC tokens during recent days.

Today, Dash, Monero, and Zcash continued to rally. Dash


(https://coinmarketcap.com/currencies/dash/) made gains of approximately 40% to set a
record high of over $1500, whilst Monero
(https://coinmarketcap.com/currencies/monero/) traded within a 40% range, witnessing
the establishment of a new high of approximately $450. Zcash
(https://coinmarketcap.com/currencies/zcash/) ramped up by over 20% to test the $680
area for the rst time since the extreme price action witnessed during the launch of ZEC.

Do you think that Bitcoin Cash will continue to establish new all-time highs? Do you
think that bitcoin can break above $20,000 across major exchanges? Share your
thoughts on the markets in the comments section below!

Images courtesy of Shutterstock, Trading View, GDAX

Need to calculate your bitcoin holdings? Check our tools (http://tools.bitcoin.com)


section.

(https://news.bitcoin.com/author/samuelhaig/)
Samuel Haig (https://news.bitcoin.com/author/samuelhaig/)
Samuel Haig is a cryptocurrency and economics journalist who has been passionately involved in the bitcoin space since 2012.
Samuel has written about the disruptive potential of cryptocurrency with regards to the dialectical relations within contemporary
neoliberal capitalism.

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