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Recently, Bitcoin developers have noticed some strange activities on the blockchain. In particular, a large number of unidentified OP_RETURN the transactions have been discovered.
OP_RETURN is a type of Bitcoin transaction that is used to embed data in the blockchain. It can be used for anything by trying the existence of some data at a specific time (proof-of-life) to the issuance of new activities, like the controversial Tether linked to the US dollar, on top of the Bitcoin blockchain.
Over the weekend, it became more widely known that the entity behind these transactions is VeriBlock, which is a project based on Bitcoin's blockchain in an attempt to better protect networks of alternative cryptographic assets. Second Casa CTO Jameson Lopp is VeriBlock's own block explorer, VeriBlock has grown to the point that it now accounts for about 20% of all daily Bitcoin transactions.
What is VeriBlock?
The idea behind VeriBlock is the proof-of-proof (PoP) concept. This is the additional consent mechanism used by blockchains that integrate with VeriBlock.
Altcoins tend to have security problems due to the relatively low reward for the extraction of these chains compared to Bitcoin. For example, It's a mining attack that's happening on the $ 500 million Ethereum Classic network right now. Without enough hashrates, it becomes easier for the nefarious actors to essentially rewrite the history of a ledger of an encryption. This allows attackers to do things like sending the same coins or tokens to two different parts, essentially creating new money from nothing.
The purpose of VeriBlock is to improve the security of these alternative blockchains by incorporating the current state of the altcoin register into the Bitcoin blockchain. Instead of relying solely on its own hashrate for security reasons, VeriBlock allows a blockchain to exploit the enormous amount of computing power already on the Bitcoin network.
In particular, the former Bitcoin Core collaborator, Jeff Garzik, who led the development the attempt to rig SegWit2x rigid fork abandoned by Bitcoin in 2017, is part of the VeriBlock team.
Although the VeriBlock blockchain is still being tested, the OP_RETURN transactions it generates already generate about 20% of all transactions made on the Bitcoin network every day.
What does this mean for Bitcoin?
The idea of incorporating alternative data into Bitcoin's blockchain is not new. In fact, there has been a technical debate about whether this kind of transaction should be encouraged more than five years ago. This debate eventually led to the introduction of the OP_RETURN operator in Bitcoin Core 0.9.
In the past, the creator of Ethereum Vitalik Buterin claimed he avoided building his project on Bitcoin because of the perception that Bitcoin developers would make things difficult for him by limiting the extent to which data can be incorporated into the Bitcoin blockchain.
There are different opinions about the fact that VeriBlock should be defined as nothing but spam, but the way a system operates without authorization like Bitcoin is that anyone willing to pay a tax will get their own transactions in the blockchain.
For now, VeriBlock is making it more expensive to make actual money transfers on the Bitcoin network due to the limited availability of space in the block. However, there is really nothing anyone can do about it as long as people are willing to pay Bitcoin transaction fees in an effort to improve the security of alternative blockchains. The profitability of VeriBlock and its effect on Bitcoin will be something worth tracking in 2019.
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Recently, Bitcoin developers have noticed some strange activities on the blockchain. In particular, a large number of unidentified OP_RETURN the transactions have been discovered.
OP_RETURN is a type of Bitcoin transaction that is used to embed data in the blockchain. It can be used for anything by trying the existence of some data at a specific time (proof-of-life) to the issuance of new activities, like the controversial Tether linked to the US dollar, on top of the Bitcoin blockchain.
Over the weekend, it became more widely known that the entity behind these transactions is VeriBlock, which is a project based on Bitcoin's blockchain in an attempt to better protect networks of alternative cryptographic assets. Second Casa CTO Jameson Lopp is VeriBlock's own block explorer, VeriBlock has grown to the point that it now accounts for about 20% of all daily Bitcoin transactions.
What is VeriBlock?
The idea behind VeriBlock is the proof-of-proof (PoP) concept. This is the additional consent mechanism used by blockchains that integrate with VeriBlock.
Altcoins tend to have security problems due to the relatively low reward for the extraction of these chains compared to Bitcoin. For example, It's a mining attack that's happening on the $ 500 million Ethereum Classic network right now. Without enough hashrates, it becomes easier for the nefarious actors to essentially rewrite the history of a ledger of an encryption. This allows attackers to do things like sending the same coins or tokens to two different parts, essentially creating new money from nothing.
The purpose of VeriBlock is to improve the security of these alternative blockchains by incorporating the current state of the altcoin register into the Bitcoin blockchain. Instead of relying solely on its own hashrate for security reasons, VeriBlock allows a blockchain to exploit the enormous amount of computing power already on the Bitcoin network.
In particular, the former Bitcoin Core collaborator, Jeff Garzik, who led the development the attempt to rig SegWit2x rigid fork abandoned by Bitcoin in 2017, is part of the VeriBlock team.
Although the VeriBlock blockchain is still being tested, the OP_RETURN transactions that it generates already represent about 20% of all transactions made on the Bitcoin network every day.
What does this mean for Bitcoin?
The idea of incorporating alternative data into Bitcoin's blockchain is not new. In fact, there has been a technical debate about whether this kind of transaction should be encouraged more than five years ago. This debate eventually led to the introduction of the OP_RETURN operator in Bitcoin Core 0.9.
In the past, the creator of Ethereum Vitalik Buterin claimed he avoided building his project on Bitcoin because of the perception that Bitcoin developers would make things difficult for him by limiting the extent to which data can be incorporated into the Bitcoin blockchain.
There are different opinions about the fact that VeriBlock should be defined as nothing but spam, but the way a system operates without authorization like Bitcoin is that anyone willing to pay a tax will get their own transactions in the blockchain.
For now, VeriBlock is making it more expensive to make actual money transfers on the Bitcoin network due to the limited availability of space in the block. However, there is really nothing anyone can do about it as long as people are willing to pay Bitcoin transaction fees in an effort to improve the security of alternative blockchains. The profitability of VeriBlock and its effect on Bitcoin will be something worth tracking in 2019.
