What is the mini blockchain scheme?

The mini blockchain scheme aims to counter issues of scalability within blockchains. The scheme uses a balance sheet system to eliminate parts of the massive amount of information stored on the network.

At its simplest, a mini blockchain is just a regular blockchain without a stored copy of historic blocks. It’s about separating the functions of the blockchain into separate mechanisms which can provide the network with increased bandwidth, greater flexibility, and higher transaction speed.

By replacing the full blockchain, the mini blockchain scheme can allow the implementation of this technology on a larger scale. That means it can be used in industries where users need to process data quickly and securely.

The controversy behind blockchain scalability

Scalability is a hot topic in the crypto ecosystem, as the need for growth continues to put pressure on developers and blockchain investors.

Blockchains need to increase TPS without sacrificing security and decentralisation. However, so far, the crypto community hasn’t agreed on a solution that provides all three qualities: speed, safety, and decentralisation.

For instance, Bitcoin can handle just seven transactions per second, while Ethereum has reached around 15. These blockchains are considered secure and decentralised. But they’re slow, and as more information accumulates on these networks, transaction wait times will grow.

On the other hand, there’s Ripple, which can handle an impressive 1,500 transactions per second. But, the network isn’t a blockchain at its core. Nodes don’t compete for the hash – they follow other nodes instead.

For now, the more decentralised the network, the more difficult it is to scale. As peers come and go, an overly large network would struggle to maintain the security of the chain – in the absence of a centralised authority at least.

Moreover, without a scalable system in place, users would continue to pay expensive transaction fees and suffer bottlenecks.

How the mini blockchain scheme works

Blockchains “remember” every transaction, which allows them to prevent double spending, fraud, and potential attacks. This quality is what makes smart contracts and other blockchain-based solutions possible. At the same time, it adds huge amounts of information to the network, significantly slowing down processes.

The mini blockchain scheme works as a finite blockchain with a limited number of blocks and nodes. This way, the network can support and store a limited amount of data.

Every time a new block is mined, the network removes the oldest block in the chain and sends it into a “proof chain” that stores the history of all transactions.

This protocol doesn’t affect security because the data is transmitted to a database tasked with holding the balance of all the non-empty addresses on the blockchain – called an “account tree”.

These three elements – the proof chain, the account tree, and the mini blockchain – secure each other to ensure the integrity of the system and the security of all members and addresses.

Since all transactions are operated on the mini blockchain (which doesn’t store old data), users have more block space. They will then see quicker network synchronisation and improved TPS.

The white paper describing the mini blockchain scheme introduces an alternative cryptocurrency, the Cryptonite, as a variant of the current Bitcoin protocol. According to its creators, the mini blockchain could scale well enough to meet the needs of the real world, enabling mass adoption of blockchain technology.

Alternative solutions for scalability

The Cryptonite team and their mini blockchain scheme aren’t the only ones aiming to address the issue of blockchain scalability.

Many start-ups are looking into a large variety of alternative solutions to enable blockchains to provide speed, security, decentralisation, and scalability.

For instance, Ethereum plans to implement sharding to break the blockchain into manageable parts. Each part is responsible for processing its own transactions – a similar process to the mini blockchain scheme.

After a controversial hard fork, Bitcoin too had to look for new ways of scaling. The network has introduced Segregated Witness (Segwit) – a protocol update that changes the way data is stored on the blockchain – to increase the number of transactions per block. This protocol has already been adopted by Litecoin, as well.

The Lightning Network is another scaling solution for Bitcoin that looks to increase the network’s efficiency through private, off-chain channels. This way, users can benefit from instantaneous transactions with minimal fees.

Final thoughts about the mini blockchain scheme

The mini blockchain scheme could be at least a partial solution to the scalability issue. However, so could most of the alternatives mentioned above.

The creators of Cryptonite and the mini blockchain concept still have a lot to prove in terms of the efficiency of its system and security in the long run.