Bitcoin’s Silver Bullet: How to Get 10x Scaling and 0-Conf Today

  1. When a Poloniex user wants to pay a BitPay customer, Poloniex signs a redeem script spending the UTXO from Transaction A (with some proceeds going to BitPay and some going back to Poloniex) and presents this signed transaction to BitPay. BitPay can countersign and broadcast this transaction (let’s call it Transaction B) at any time. BitPay chooses not to countersign/broadcast this valid transaction B, for now at least.
  2. When another Poloniex users wants to pay another BitPay customer, Poloniex again signs a redeem script spending the same UTXO from Transaction A (with correspondingly more proceeds going to BitPay and correspondingly less going back to Poloniex) and presents this signed transaction to BitPay. BitPay can countersign and broadcast this transaction (let’s call it Transaction C) at any time. Transaction C is technically a double-spend of Transaction B, but BitPay has no risk of a double-spend attack because both transactions require BitPay’s countersignature, and BitPay does not give that out for intermediate transactions. BitPay again chooses not to countersign/broadcast this valid transaction C, for now at least.
  3. The process in step 3 can repeat until all 10 BTC have been spent, or 72 hours have passed since Transaction A settled. However, only two transactions will ever hit the blockchain: Transaction A to open the channel and the final transaction that BitPay chooses to countersign/broadcast to close the channel. Even if the channel processed 1,000 transactions, only 2 fees will be paid!

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https://www.michaelflaxman.com

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Michael Flaxman

Michael Flaxman

https://www.michaelflaxman.com

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