Is There a Better Bitcoin Coming?

Bitcoin’s innovative properties are well-documented: its immutable transaction record, driven by blockchain, that cuts out middlemen; the privacy it extends to users; the decentralized nature of the network it is built on, and more.

For all its positives, one aspect of bitcoin and other digital currencies has always lagged behind – literally. The system as currently constructed is seriously speed-deficient, only able to process around seven transactions per second; a traditional credit card company’s network like Visa’s, for example, can process tens of thousands of transactions in the same amount of time. Lack of speed has hindered the widespread adoption of cryptocurrencies for payments, with most enthusiasts instead of focusing on their ability to store value.

But if David Chaum, who built a privacy-centric digital currency with his company, DigiCash, in the mid-1990s, is to be believed, the days of molasses-slow processing may be over. Chaum claims his new platform, called Elixxir, can process thousands of transactions a second while simultaneously reducing the energy required to run and maintain its network.

The bitcoin network is built on blocks, each of which is composed of multiple individual transactions bundled together. These blocks are then chained to each other, with the whole transaction history constantly updating itself on each computer in the network. Participants on the network compete to batch and process transactions via a procedure called mining. Processing a block creates new bitcoins, which are then awarded to the first person to do so.

Chaum contends that Elixxir flips that process, first producing blocks and then filling them as transactions are recorded. Unlike bitcoin’s blockchain, Elixxir’s blocks do not contain the transactions themselves and are not linked to digital wallets, cutting down the amount of information to process and store – Chaum claims this also reduces security issues. Less information means the network requires less energy to run and, in theory, treats all miners equally, dispensing of the-more-power-the-better ethos that dominates bitcoin mining (and accounts for eye-popping electric bills).

The system is not without fault – purists may balk at certain compromises to achieve those results, like a limit on the number of producers that makes Elixxir’s network less decentralized.

But if true, Chaum will have solved the final piece of the digital currency puzzle. “We can actually meet the requirements to go to consumer scale,” said Chaum in an interview. Time will tell, but Elixxir just may be the better bitcoin we have all been waiting for.

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