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New Proposal for a More Efficient Bitcoin Network

Bitcoin is reputed to be particularly resistant to hacker attacks. This is mainly due to the fact that Bitcoin hackers no central point of attack, about in the form of a single server delivers. Instead, there are several thousand network nodes worldwide, the Bitcoin protocol and the associated transaction history (ie the blockchain).

Before a BTC transfer lands in the blockchain, it must first be made known to the network node. This, in turn, happens by passing a node that has received the announcement of a Bitcoin transaction, it to each of its neighboring nodes in the Bitcoin network. This type of information transfer is called flooding. In this way, the information travels through the entire Bitcoin network. The latter currently consists of about 60,000 taxable nodes – 6,000 of which are full nodes. Full Nodes are named because they permanently store the entire Bitcoin Blockchain, synchronize with the network, and validate geminated blocks. A full node in the Bitcoin standard configuration has 125 “channels” (ports). Of these, a maximum of eight serve as outgoing channels for forwarding information to the neighboring network nodes. Private nodes only have the outbound ports.

Redundant in the Bitcoin network

Now the main problem of Flooding is its lack of efficiency. This way, every node in the network learns several times about a planned transaction. This redundancy is reflected in a disproportionate amount of traffic. The authors of Bitcoin’s ” Bandwidth efficient transactional relay” paper have developed an approach called “Erlay” that can greatly reduce unnecessary data traffic in the Bitcoin network.

Instead of announcing each transaction on each link, a node that uses our protocol [proclaims] to a subset of peers – that’s called low fanout flooding. To ensure that all transactions reach the entire network, nodes regularly participate in an interactive protocol to detect missed announcements and request missing transactions. [This] is called reconciliation [Set Reconciliation].

The combination of low-fanout flooding and set reconciliation resulted in significant savings in Bitcoin traffic in the researchers’ simulated test environment. Erlay also achieved significant increases in efficiency in the practice test with 100 nodes.

With the previous Bitcoin protocol, the traffic increases proportionally with the number of connections of the nodes. Erlay allows you to increase connectivity while keeping the data volume low. More connections per node make the network more resilient to attacks, the authors said. Meanwhile, the researchers are working on an implementation of Erlay for BTC core nodes. The researchers are currently asking the BTC developer community for feedback.

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