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Extension Blocks Bid to Increase Bitcoin Blockchain Transaction Capacity

Last Updated March 4, 2021 4:55 PM
Lester Coleman
Last Updated March 4, 2021 4:55 PM

Extension Blocks, a solution designed to create larger blockchain blocks by means of a second layer that users opt in to, is available for review with demo functionality and code. The proposal, introduced on GitHub, has gained attention recently since it addresses the need to increase the bitcoin block size without requiring a hard fork.

Andrew Lee, CEO of Purse.io, an online marketplace that encourages bitcoin use and innovation, summarized the proposal in an entry on Medium .

Christopher Jeffrey, Purse.io CTO, was among the parties publishing the proposal, along with Joseph Poon, a Lightning Network developer, Stephen Pair, BitPay CEO and Fedor Indutny, a PayPal software engineer.

A Commitment To Bitcoin

Lee said the proposal is a statement of belief in bitcoin as a global currency but in the spirit of liberty and innovation. He claimed key aspects of the bitcoin ecosystem can be maintained with Extension Blocks.

The Extension Blocks attach to the end of a canonical block when it activates. They provide the foundation of smart contracts on the bitcoin blockchain. In one Extension Blocks deployment, funds can be transferred from the canonical block and the extension block, enhancing fungibility.

In comparison to scalability solutions Segregated Witness and Emergent Consensus, Extension Blocks’ ideology encompasses the digital gold associated with Segregated Witness and the electronic cash embraced by Emergent Consensus.

Extension Blocks upgrade by means of a soft fork, a characteristic it shares with Segregated Witness, but unlike Emergent Consensus, which upgrades via a hard fork.

The proposal noted that other plans for increasing the bitcoin block transaction throughput have no proposed consensus layer solutions that have been proven to be especially safe.

Modification Of An Earlier Proposal

Johnson Lau proposed Extension Blocks in 2013. Under Lau’s proposal, funds enter and exit an extra block through opcodes. The new Extension Blocks proposal builds on Lau’s ideas but offers a simpler value transfer method. Lau proposed consensus-layer UTXO selection.

Extension Blocks utilize features of BIP141, BIP143 and BIP144 for transaction opt-in, verification, serialization and network services, according to the draft  of the specification on GitHub. The specification is an extension to the BIPs. Since Extension Blocks are not compatible with BIP141, additional rules are needed.

Extension Blocks maintain their own UTXO set to avoid interfering with the UTXO set of non-upgraded nodes. This requires a resolution transaction at the end of every canonical block.

Opt-In Benefits

Extension Blocks benefits are provided on an opt-in basis. Those who don’t opt in can continue to use bitcoin.

The extension block provides the flexibility to increase even further by means of a soft fork. It also provides the fungibility to transfer funds to and from the extension block.

Minimal changes are required of wallet software.

Extension Blocks also supports smart contracts and Lightning Network, as well as future innovations like Rootstock and MimbleWimble.

When a majority of miners support Extension Blocks, users will be able to take advantage of its features.

A testnet will be available in a few weeks.

The Extension Blocks proposal, according to Lee, is a transparent process with bitcoin stakeholder input, including miners, users and members of the economic industry.

Consistent With Purse.io’s Goals

The proposal is consistent with the goals of Purse.io, which was established to provide real world applications for bitcoin. It began by offering Amazon discounts. It now carries more inventory than Amazon, eBay and Google Shopping, with lower prices.

The company’s mission is to provide ultimate transparency and efficiency to global commerce.

Purse.io last year introduced bcoin, a Javascript library to help bitcoin businesses build applications. It provides a full node implementation that allows it to utilize new additions to the bitcoin code base as they become available.

Featured image from Shutterstock.