The impact of VeriBlock PoP blockchains on the main Bitcoin blockchain

VeriBlock, “a project that piggybacks on the Bitcoin blockchain in an effort to better secure alternative crypto asset networks,” now accounts for roughly 20 percent of all daily Bitcoin transactions, Kyle Torpey reports in Forbes.

The VeriBlock blockchain, announced at the 2018 North American Bitcoin Conference in Miami, “allows any blockchain to inherit the full security of the Bitcoin blockchain in a completely decentralized, trustless, transparent, and permissionless manner,” according to a VeriBlock press release of January 2018.

Any new or existing blockchain, including eco-friendly blockchains with low energy footprint, can “begin protecting every transaction on their network with the same unparalleled computational force that secures transactions on Bitcoin.”

The impact that VeriBlock is now having on the Bitcoin blockchain is revealed by a large number of OP_RETURN transactions, which can be traced back to Veriblock. Torpey explains:

“OP_RETURN is a type of Bitcoin transaction that is used for embedding data into the blockchain… Although the VeriBlock blockchain is still in a testing phase, the OP_RETURN transactions that it generates already account for roughly 20% of all of the transactions made on the Bitcoin network every day.”

The VeriBlock blockchain enables Proof of Proof (PoP) security for other blockchains. “PoP mining enables blockchains to inherit and leverage the Proof of Work from a superior blockchain such as Bitcoin,” explains the main VeriBlock website. “As a result, the reinforced security provided by PoP will encourage further adoption of these alternative blockchains.”

Another VeriBlock website features a VeriBlock testnet explorer and a video that explains how, using VeriBlock, other blockchains “can benefit from Bitcoin’s computational power and unrivaled security.”

The VeriBlock white paper explains that PoP aims to enable a security inheriting (SI) blockchain to inherit the complete proof-of-work security of a security providing (SP) blockchain.

“PoP miners serve as the communication/transactional bridges between a SI blockchain and a SP blockchain. As often as they wish, PoP miners will take the most recent blockchain state data from the SI blockchain and publish it to the SP blockchain, along with some identifier, which allows them to later receive compensation by creating a SP blockchain transaction with the SI blockchain state data and identifier embedded in it, and submits it to the SP blockchain network. Several different methods can be used for embedding the blockchain state data in a SP blockchain transaction: OP_RETURN, fake addresses, fake addresses in multisig, etc.”

The VeriBlock creators are persuaded that most blockchains will want to inherit consensus security from Bitcoin. Their “intermediary aggregation” VeriBlock blockchain is designed to secure directly with Bitcoin using PoP, and allow other blockchains to publish arbitrary blockchain state data directly to VeriBlock, which gets published by proxy in aggregate to Bitcoin.

Torpey notes that VeriBlock “is making it more expensive to make actual money transfers on the Bitcoin network due to the limited availability of block space.”

“However, there isn’t really anything anyone can do about this as long as people are willing to pay Bitcoin transaction fees in an effort to improve the security of alternative blockchains.”

It seems likely that VeriBlock will be criticized for cluttering the Bitcoin blockchain and making it less efficient for pure Bitcoin transactions. However, allowing VeriBlock can also be seen as a service that grandaddy Bitcoin provides to younger and less established blockchains.

Image from Pixabay.