Business 23 January 2019

Erik Gibbs

Steve Shadders on why Bitcoin Core is wrong on mining costs

Many Bitcoin Core (BTC) pundits have argued that one of the reasons scaling is a monumental task is because signature validations require a serious amount of CPU time, which raises costs substantially. Steve Shadders, a well-known cryptocurrency coder and the technical director for nChain, used this past weekend to crunch some numbers and play around with code, and what he found may astonish many. Not only is it possible to reduce the amount of time needed to validate signatures, but the results could allow miners to earn more than they possibly ever imagined. 

Shadders breaks down his efforts on Twitter, stating, “Weekend fun. Built a little sig validation server and a clustered client. Just to see if it was worth [pursuing]. Getting close to O(n/2) scaling benefit. Sigops [signature operations] are the most expensive operation in transaction validation…”

He follows up his post by crunching the numbers – 400 bytes/transaction and an average 2.5 sigops per transaction. 171,000 sigops per second at $320 per month, 443 billion signatures per month and 41GB in sustained blocks. With 41 million transactions per block and 68,000 per second, there would be 177 billion transactions each month, which, at a transaction fee of just $0.01, there is the possibility of making $177 million in revenue each month. 

In separate correspondence to CoinGeek, Shadders explains, “I wrote a server that can validate signatures. But the key difference is you can have many servers all working together. I did a proof of concept with 5 servers and one client. It showed that for every extra server at a cost of $40/month it could add 20,000 signatures per second capacity.”

He adds, “There are other costs on top of that… But it’s probably the one everyone has spent most time worrying about. The main point is there’s [a ton] of money to be made for miners…”

The coding guru recently said that Bitcoin SV needed to focus on scaling and his test from this past weekend seems to indicate how that process can be greatly improved. Ultimately, this will help BSV achieve the main goal of the digital currency – to be recognized as the only crypto that exists to be used as an alternative to fiat.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

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