You may have heard of an issue with Bitcoin that some say makes it unusable for day to day transactions. This is known as the ‘Bitcoin Scalability Problem.’

The problem is that Bitcoin is limited by its 1MB block size, which has slowed transactions down to between 3-7 transactions per second. This creates a bottleneck in transaction speed and extremely high transaction fees (up to $30) that make it unusable for things like buying a cup of coffee.

This solution to this problem has created an ideological battle in the Bitcoin community. Some people think simply increasing the block size beyond 1MB will solve this problem, and others are thinking of a different solution called the Lightning Network. The block size increase community has already ‘forked’ Bitcoin to create a spin off currency with 8MB block sizes called Bitcoin Cash, while the Lightning community is working on getting the Lightning Network implemented for the original Bitcoin.

The main benefits of using these off chain solutions for the University blockchain is that it will make the blockchain faster, scalable, and more usable.

What is the Lightning Network?

The Lightning Network is an ‘off chain’ solution that allows parties to transact with each other in ‘bidirectional’ channels off of the main Bitcoin blockchain, with set rules in place to ensure validation and compliance for both parties. After certain conditions are met, this set of transactions between parties is then sent to the main Bitcoin Blockchain and permanently written to a block.

This is also referred to as a ‘second layer’ payment protocol that exists on top of the first layer Bitcoin protocol. This solves the scalability issue created by the 1MB block size by allowing people to create microtransactions in a peer to peer environment with extremely low fees and near instant transactions.

Ethereum Has A Similar Problem and a Similar Solution

Ethereum, the second largest cryptocurrency after Bitcoin, has created a similar problem in that it is hard coded to limit the number of computations per block. This slows down the transactions to around 15 per second and also creates high fees, though not as high as Bitcoin’s.

The reason for this limitation has to do with keeping Ethereum decentralized. It is currently possible for normal people to run a ‘node’ to validate Ethereum transactions and receive rewards on their systems with the limitation in place. If they were to remove the limits, the size required for a node (a node requires you to store the entire Ethereum transaction history) would become so large that only a few would be able to run one, centralizing the network down to the few powerful operations who can still afford it.

Enter Raiden

Raiden is extremely similar to Lightning. For the layman, there is almost no difference. Raiden is also an ‘off-chain’ solution that allows for peer to peer channels to be created to trade Ethereum and ERC20 (Ethereum Based) tokens. Transactions are settled between peers off-chain, and then written to the Ethereum blockchain once certain conditions are met, just like Lightning.

This allows scalability by allowing near instant transactions, low to no fees, and allows micropayments to become possible for day to day transactions.

How To Implement This for Higher Education

If a state-wide or nation-wide university system were to use blockchain technology, it may run into the exact same problem with scalability as its use increases.

The Lightning/Raiden solution could be used to localize blockchain transactions within smaller institutions and groups, then sending the data to the main university system blockchain in chunks, just like Lightning and Raiden does with Bitcoin and Ethereum.

Here are some examples of how that would play out:

  • Channels between professors and students are created within a course. Token transactions take place for points earned through tests and assignments and a formula is used to create the final grade. The final grade is then written permanently to blockchain from the ‘off-chain’ channel after the course is complete.
  • During the course sign up process, students can create an off-chain channel with a course they want to sign up for and temporarily enroll. Once they have finalized their schedule and the course has confirmed there is room, the student’s schedule for the semester can be written to the university blockchain.
  • In the University blockchain future, we will be seeing ‘incentivized courses’ that allow students to earn tokens for excelling during a course. These token rewards can be received off chain during the semester, with the tokens paid out to the main blockchain after course completion. This allows for faster token transactions within the course and for token balances to go up and down before being permanently written to a blockchain.
  • The University blockchain will be used to verify transcripts and credentials. This will mean that a series of verifications between the professor, students, and 3rd parties will need to take place to certify grades and a degree. With the off chain solution, these verifications could take place much faster while only writing to the blockchain once the semester’s grades are final or the degree is awarded.

The main benefits of using these off chain solutions for the University blockchain is that it will make the blockchain faster, scalable, and more usable. Therefore, it would be feasible for local networks to exist independently and then write to the larger University system blockchain to make records permanent.

Raiden High

Now for fun thought experiment. Imagine you went to high school that runs completely on a blockchain, but it implements a Raiden network system and is called ‘Raiden High.’ What would that be like and what kinds of funny things might happen?

Incoming Freshmen would rush to get their ‘academic wallets’ set up so they can open up channels with the ‘cool’ teachers or the ones that are easy to get an A. Students that are too slow to sign up end up getting pushed on to the ‘mean’ teachers channel and reluctantly get their scheduled verified on the main blockchain.

Certain teachers would be known to give out more ‘reward’ or ‘school spirit’ tokens than others, making their classes more preferable. These ‘school spirit’ tokens could be used to set up a direct channel with the lunch lady to buy sweets and snacks.

Student elections take place using the ‘school spirit’ tokens to vote on an off-chain election channel. Because there is only one winner for each category, only the winner who goes on the blockchain will actually keep the tokens, which can then be used for ‘school improvement projects.’ Refunds will be sent to voters of losing candidates. This leads to students actually carefully considering who they vote for, rather than the typical popularity contests of the past.

Some ‘cypherpunks’ in the computer club learn how to create their own off chain channels between each other and a black market ‘school spirit’ token economy emerges. It starts out with trading character upgrades for a computer game that all of the computer club kids play, but extends out to the popular kids for more unsavory substances. The two kids who create the black market system get caught and get expelled despite their computer genius. The two high school dropouts go on to start up a wildly successful blockchain company on their own.

Rivers Need Tributaries

While speculating on what a blockchain high school might look like is fun, the fact remains that blockchain technologies need to be scalable to work efficiently at the local level while maintaining a larger system wide blockchain at the same time.

Lightning and Raiden may prove to make blockchain technology feasible through the increased speed and efficiency of off-chain transactions. Huge rivers don’t exist on their own, tributaries, streams, and creeks flow into them, which make them flow faster and carry more water than they would on their own. Ben Corpus Baruch College NCAA Ben Corpus University of Texas NCAA Ben Corpus NCAA NCAA Ben Corpus NCAA Baruch College

Leave a Reply