Plasma Cash, A Scaling Solution That Could Make Exchanges Hack Resistant

Ethereum founder, Vitalik Buterin presented a Blockchain scaling solution called Plasma Cash, a system of smart contracts that aims to increase the Ethereum blockchain’s computational potential.

This solution was presented at the ethereum community conference EthCC in Paris just this past Friday on March 9.

Plasma was first introduced by Buterin and Lightning Network co-creator Joseph Poon last year in August 2017. Plasma is a series of contracts that runs on top of a root blockchain such as the Mainnet Ethereum blockchain. It optimizes data that is passed onto the root Blockchain, essentially reducing transaction fees for the DApps and smart contracts on the platform.

Buterin states that the biggest problems of Plasma was its scalability, in that every user on the network must authenticate each block, preventing exponential scaling.

Rather than having to download the entire Plasma history, users would be able to instead generate Plasma coins by sending deposits to the contract. Buterin says:

“A user actually only needs to verify the availability and correctness of the Plasma chain only at the specific index of the coin, of any coins that they own and any coins that they care about.”

A practical application for Plasma Cash is for crypto exchanges to use the this technology to make themselves more hack resistant.

Because every Plasma coin has an separate, individual owner, the coins are not replaceable nor interchangeable. This means that no user can take coins from another user without the owner being notified. The owner of the coins would prevent potential fraudulent withdrawals through a complaint system by showing their “proof data” for the coin’s history.

“Regardless of what happens in the exchange, users can run their money through the Plasma exit procedure and get their money out.”

Rather than having the exchanges deal directly with its users funds, the vision for Plasma Cash is that the exchanges could insure losses and gains through Plasma contracts.

“Hopefully when the next big multi-billion dollar exchange written by a totally incompetent developer gets hacked, no one will lose any money.”

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Originally published at on March 11, 2018.