Bitmex Awards $40K Grant for Bitcoin Scaling Solution

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In Brief
  • BitMEX has awarded a $40,000 grant to developer Calvin Kim

  • Kim helped with Utreexo, a protocol aimed at lowering BTC fees

  • This comes as developers vie for blockchain scalability solutions

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The 100x Group, operator of crypto-derivatives company BitMEX, has awarded a $40,000 grant to Bitcoin (BTC) developer Calvin Kim.

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Kim helped develop a new protocol, dubbed Utreexo, aimed at saving the network time and money.

Permission Granted

Kim helped bring the alpha version of the protocol to life. Utreexo shrinks the UTXO (unspent transaction output) without damaging the network. UTXO is the current framework for several blockchains, including Bitcoin.

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In UTXO, some bitcoin is “left over” during a transaction. These funds are used to initiate and end transactions. It’s like spending a little to ensure that the ledger records the transaction. Any “extra” bitcoin not spent during a transaction goes back into the database. This is the UTXO.

Right now, every node has to record the correct amount of UTXO in order to produce confirmations. This is integral to letting the network run smoothly. But it’s not cheap.

Complaints of high fees have plagued Bitcoin since the 2017 bull run. In April, the controversial Roger Ver claimed he “regularly” paid $1000 in bitcoin transaction fees. Calvin Kim, however, has found a way to save both money and power.

Precious Memories

Even before the grant was announced, Kim had already created the Utreexo protocol. In fact, he produced the alpha version. He also demonstrated its functionality in July of this year. This is a big step towards scalability.

The BitMEX blog explains that the current issue involving UTXOs is all about memory,

It is important to distinguish between the full transaction history, the full blockchain which is around 300 GB in size and the set of spendable coins, the UTXO set which is around 4GB. Nodes can prune the full blockchain, however they are required to retain the full UTXO set, to validate new transactions and spend coins.

In a different approach, “Utreexo is a hash based accumulator which allows unspent outputs to be compressed to a smaller size.” The network becomes more efficient without compromising on security.

To achieve this, the “burden” of keeping track of the funds falls on the owner of the funds, rather than the node. This “proof” can be as compact as 1KB.

Importantly, as the network and use of Bitcoin grows, this cheaper solution could save time and memory. The grant comes as the crypto community seeks ways to deal with scalability due to increased adoption of these protocols.

More Innovation

The grant will encourage Kim and others to continue searching for a more efficient way to implement blockchains.

Scaling solutions appear to be making headway. This month, during bitcoin’s bull run past $12,000, some transaction fees remained around $0.15. The result is partly thought to be due to the adoption of SegWit, a solution that was at its inception controversial.

Source: bitinfocharts

What’s more, since January, major exchanges have been looking toward SegWit compatibility. Overall, fees still remain high when traffic is heavy.

Researchers do not always have easy access to development capital. Tadge Dryja, a developer from MIT’s Digital Currency Initiative, originally developed the Utreexo protocol. He praised the grant, stating,

We at the DCI are looking forward to working with Calvin on improving Bitcoin’s scalability & security, and making Bitcoin the best digital currency we can.

This grant comes as part of the 100x Group’s $615,000 worth of grants for 2020.

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Harry Leeds is a writer, editor, and journalist who spent much time in the former USSR covering food, cryptocurrencies, and healthcare. He also translates poetry and edits the literary magazine mumbermag.me.

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