There's one part of bitcoin that isn't censorship resistant – its relay network.
At least that's according to the team at BloXroute Labs, which just brought its network for relaying information between blockchain nodes out of stealth with an impressive group of investors including AngelList co-founder Naval Ravikant, Metastable, 1confirmation and Flybridge Capital. Through these investors, the company raised $1.6 million in an equity round.
But the new network is more ambitious than the capital suggests. Called BloXroute, the project aims to make relay networks censorship-resistant against any number of powers by blinding the system from knowing how nodes connect with each other. And that, they say, is an improvement on the current infrastructure, largely built over the years by volunteers.
To understand this, it helps to know where relay networks originated, coming about as "mining pools," or networks of miners seeking to share profit started to form.
Smaller mining pools saw a higher number of orphan blocks (those that weren't eventually added to the blockchain) since they were usually not the ones that found blocks. This meant they spent time working on the wrong blocks as the information took time to propagate to them. So, in an effort to level the playing field, relay networks allowed faster for the faster propagation of information over the network.
While Uri Klarman, BloXroute Lab's CEO, said existing relay networks, including bitcoin developer Matt Corallo's FIBRE and Cornell Universities' Falcon, are working fine in this regard, these networks allow parties to understand network traffic, such as the IP address of the node, where it's sending information and where that information is coming from.
In this way, existing relay networks offer insight into transactions that governments, big businesses and others could exploit, censoring certain wallets.
"If the protocol depends on the relay network to scale, then that ends up that everyone has to trust the relay network for that work," Klarman said, adding:
"Then what's the point of the blockchain? Just leave the bank in the middle."
In an effort to eliminate this issue, Klarman collaborated with Cornell's Emin Gun Sirer and Soumya Basu to build what they call a "Blockchain Distributed Network" or BDN.
Inspired by the content delivery networks that allow data on the Web to be delivered quickly all around the world, the BDN is entirely controlled by BloXroute Labs. But, the company has spent a significant amount of time building in blinds that will keep the network from being censored.
The government wouldn't try to shut down the company, and in turn the whole network, just for a couple bad actors.
And some of the top venture capitalists in the space believe in that vision, seeing how this is the first time investors have funneled money into a relay network-like technology.
Ravikant told CoinDesk that's what he sees as the value-add.
"I liked it because it's addressing one of the top two problems with blockchains – scalability and the other is decentralization," he said.
A networking problem
Going deeper, BloXroute Lab's neutrality is based on its ignorance of what it carries. Put another way, the protocol "doesn't know what is the data it's propagating," Klarman said.
In fact, it doesn't even know what network it's serving. BloXroute is meant not to privilege any blockchain. Instead, it wants to make it easy for every blockchain to scale.
To that end, BloXroute's white paper describes methods that enable users to audit its blindness.
While Klarman is most proud of the censorship-resistance the team has built into the system, like Ravikant said, scalability is another one of BloXroute Labs' benefits.
"Our network is a lot faster than anything out there, by orders of magnitude," Klarman contended, pointing to the fact that the company has brought together a group of experts and has some centralized control, which allows for extra speed.
And that speed is really the key to scaling blockchains, he continued.
As blocks get larger, they take longer to propagate around the network. And Klarman fears a day when blocks become so large that the data can't reach all miners quickly enough (before the next block gets verified) and end up causing forks.
If the last block hasn't reached every miner on the network before the next block gets verified, the whole blockchain will start to unravel, the project's white paper explains.
Klarman told CoinDesk:
"Most people get the scalability problem wrong. Our main argument is the following: the scalability problem is really a networking problem."
But while BloXroute Labs isn't at the stage of focusing on revenue, its white paper does mention a token meant to provide a way to invest in BloXroute Labs (not access the system). (BloXroute has not stated when these tokens will go on sale.)
At first, BloXroute will be completely free to use. Nodes will pay BloXroute by adding a very small extra charge to transaction processing fees to users, but Klarman contends this should more than be paid for by the fact that the scaling it permits will prevent the bottlenecks that cause fees to go up.
The fees will be negligible, fractions of a penny, but 50 percent of all fees collected would go into a fund backed by the bloXroute token. The token entitles a holder to a proportional share in all the fees that had collected in that fund up until redemption. So, if there were 100 tokens and $100 in the fund, redeeming a token would be worth $1.
As BloXroute becomes hugely popular and orders of magnitude more transactions are going through, it will also reserve a percentage of its bandwidth for transactions that don't pay the fee. Klarman said, the "limitation is in place to prevent bloXroute from censoring transactions," even freeriding transactions.
That scale of activity is a long way off, though. BloXroute and its supporters are more focused now on proving the promised speed, and that's why its earned the support of major crypto investors.
"We're excited about all of the research that is currently happening around figuring out blockchain scalability and we think that it's possible that there are many winners here." Nick Tomaino of 1Confirmation told CoinDesk.
As anyone who followed the scaling debate within bitcoin knows, though, scaling is both a technical problem and a governance problem.
Take bitcoin for example: even if bloXroute's speed really clears away any concerns about increasing block sizes, the miners still have to opt-in. Nothing can force them to. When asked why he was sure bitcoin miners would adjust block size even as propagation becomes easier, Klarman argued that bitcoin alone isn't really the point.
"We remove the scalability for all cryptos. And this is the point where cryptos should start to compete over real-world traction," Klarman said.
"Each crypto would make its own decision what to do."
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