For all the good that Bitcoin brings, it also has a commonly accepted problem of scalability. Bitcoin can only process a limited number of transactions per block, and as of August 17, 2022, it can handle about five transactions per second, which compared to most other blockchains is low.. The factor that limits scalability lies in the cryptographic algorithm of Bitcoin.
The Elliptic Curve Digital Signature Algorithm (ECDSA) is the essential cryptographic algorithm that powers Bitcoin and ensures that only the rightful owner can access and manage their funds. Currently, verification of the ECDSA, a Bitcoin signature that allows Bitcoin (BTC) to be transacted and sent, is not efficient and limits the scalability of the Bitcoin blockchain. One possible solution is to use zero-knowledge proof (ZKP) technology, which allows for a higher degree of privacy and security.
A recent paper from Starkware presents a method to efficiently verify the ECDSA from the STARK ecosystem, potentially solving the blockchain trilemma for Bitcoin, i.e. achieving scalability, security and decentralization simultaneously.
technology basics
A ZKP is a cryptographic technique that allows the verifier to confirm someone else’s request without supporting data. ZKPs are cryptographic protocols that keep third parties away from users’ privacy. ZKPs can also be a useful building block for many cryptographic protocols, ensuring that participants follow the protocol specifications. Privacy and scalability are improved with ZKPs because only certain data is revealed and transactions are made without revealing all the information that needs to be proven.
Based on ZKP technology, STARK, or Scalable Transparent Argument of Knowledge —invented by Starkware— is a type of cryptographic proof technology that allows data to be communicated with a third party, for example, signing transactions without revealing the data. It also allows moving the calculations and storage of validated data outside the chain (off-chain), thus increasing scalability.
STARK is a quantum resistant system based on the hash functions used by Ethereum, not the elliptic curves used by Bitcoin. Importantly, the STARKs systems are considered more advanced than their predecessors, the zk-SNARKs, and can withstand attacks from quantum computers.
EC-STARK: The next step in Bitcoin scalability?
Formerly Starkware ad issuing governance tokens for its StarkNet—a STARK-based decentralized permissionless validity deployment that functions as an Ethereum layer 2 chain—to further decentralize the network and keep STARK technology a public good. Nevertheless, the underlying storage cost of Ethereum limits the scalability benefits of the technology. However, its application for the Bitcoin blockchain may present a better platform for decentralized applications in the near future.
EC-STARKs are the next generation of this technology, which aims to increase the scalability and security of Bitcoin by replacing hash functions with elliptic curves, i.e. making existing scalability solutions for Ethereum compatible with Bitcoin. With EC-STARK, you can run an off-chain protocol for Bitcoin and keep testing on STARK. In a nutshell, Bitcoin can be emulated within STARK, allowing very sophisticated protocols to be built on Bitcoin-backed tokens with the same elliptic curve keys.
Therefore, the use of this technology can not only increase the scalability of Bitcoin, but also serve as a gateway for developers to create DApps on Bitcoin, potentially creating a rival for Ethereum.
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