For the fourth and final part of our series on the Holy Grail of Crypto, I will discuss the importance of scalability to cryptocurrencies, and how we plan to make Stealth scalable while offering the strongest privacy available.

Why is scalability important?

As its most distilled definition, scalability of a cryptocurrency means that it can meet the demands of worldwide adoption. Typically, scalability is expressed as throughput, which is the number of transactions per second (TPS) a cryptocurrency can accommodate. Bitcoin, for example, is scalable to about 14 TPS. Bitcoin, in its current form, is not competitive with centralized payment systems, which require a much higher throughput. Consider that Visa processes about 1,700 TPS on average and PayPal about 200 TPS. While Bitcoin has tremendous value as a trustless transaction system, its adoption is stifled by the fact that it cannot compete with major payment platforms like Visa and PayPal.

How will Stealth implement scalability?

Stealth has undertaken to tackle the challenge of offering both cryptographic privacy and massive scalability. To achieve these two facets of the Holy Grail of Crypto, Stealth will split the problem into its two components (privacy and scalability), then apply a different ledger technology to each component. We call this system a fused ledger, and it forms the basis for Stealth’s Quantum Proof-of-Stake (qPoS) protocol.

For privacy, Stealth’s qPoS will use a technology known as a UTXO ledger. For scalability, qPoS will use what is known as a state ledger. UTXO ledgers work like travelers’ cheques wherein the cheques can be cryptographically shuffled. This shuffling means that, when one of these cheques is spent, it is impossible to know which one it was, hiding the sender.

While UTXO ledgers can support anonymous transactions, they are less efficient than state ledgers. The essence of a state ledger is that it is based on accounts, where each account is registered with the blockchain. Sending and receiving cause the account balances to change.

State ledgers offer a number of efficiencies over UTXO ledgers. Probably the most important efficiency is that the accounts can be ordered into a queue. In cryptocurrencies, such a queue can be used to organize block signers, so that the exact account designated to sign a particular block can be known well in advance. This means that blocks can be signed in rapid succession and at regular intervals. Also, because accounts and block rewards are known, the block reward transactions don’t need to be recorded into the blockchain, saving storage. This system stands in contrast to Bitcoin and many other cryptocurrencies, where blocksigners are in competition to sign blocks. This competition is massively inefficient, and this inefficiency has a tremendous negative impact on scalability, as evidenced by Bitcoin’s low throughput.

Using our fused ledger technology, Stealth will be highly efficient, offering private transactions delivered on a scalable platform that will be competitive with currently well established payment systems like Visa and PayPal.

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Hondo

https://www.stealth.org