Ethereum has a scalability problem. It has currently the ability to make 13 transfers per seconds. That is a really low capacity. So if Ethereum wants to replace visa and act as digital cash than it needs to scale up its capacity. This is possible with Ethereum Plasma.
The Problems of Ethereum
Before you understand what Ethereums problem is, you first need to understand how you can transfer money with a blockchain. So when you submit a transaction, a miner verifies and then adds it to the blockchain. The blockchain is a series of blocks which are stored in every node around the globe. Each block contains a certain number of transactions and added to the blockchain. Also, a block can’t be changed. This whole process occurs whenever you want to use any crypto to transfer money to another person. For more details about blockchain click here.
But for Ethereum there is only one blockchain. So for every transaction, the entire network of nodes must agree that the transaction is correct. Because of this, Ethereum can only transact 13 transactions per second. Especially if you consider that visa is currently processing 20.000 transactions per second. But we can solve these problems with Plasma.
What is Ethereum Plasma?
What if there are more then one blockchain for one currency. That could increase the capacity by a lot. And that is what Ethereum Plasma is trying to do. Instead of one central blockchain, they split it into two different child blockchain. These two child blockchains can communicate with the original blockchain. You can merge these child blockchains into one central chain. You could also split these two children so you would have a total of four different child blockchains. This would lead to a four times increase.
There is no limit to how many times you could split these chains. So we could replace Visa which currently does 20.000-40.000 transactions per second. So this is how Ethereum could have theoretically infinity scaling potential with Plasma.
What are the components of Plasma?
Plasma is a set of nested blockchain. It is a construction of blockchains in the blockchain. The state of these child blockchains is committed to the root chain Ethereum. So basically you have those blockchain submitting small pieces of information about the state of the child blockchain to the root chain. This doesn’t require consensus changes. You just need to set rules on how to agree on the current state with a smart contract. This is not a proof of existence. It is not just submitting times stamps only. As a result, it is enforceable.
If you commit an incorrect state, anyone else can go on the root chain and disagree. The bad actor then gets penalized. That’s called a fraud-proof and it is a set of smart contracts. So you only need the root chain when there is something wrong.
Plasma also uses MapReduce. A nested tree of blockchain can do computation by using MapReduce algorithms. So it spreads out the work across the blockchains and then takes the result and be able to compute on it. And this is compatible with other on chain scaling solutions. So capacity increases on the base layer and increases the security and performance.
How does Ethereum Plasma work?
The goal of Ethereum Plasma is to cover all worldwide computation. Therefore, you need trust minimization. So a child blockchain should be as untrusted as possible. If all members of the system try to steal your money you should be able to find ways to get out of it. So only in the event of a dispute, the data is committed to the root chain. If the fraud is then proven they roll back the transaction. Therefore the paper defines the specific mechanisms and security of properties. This can give you a transfer and ledger scalability.
So how does this all works?
You upload the smart contract onto the public Blockchain (in our case Ethereum Blockchain). So this allows you to launch your own specific DApps with your specific rules. You can then upload public code onto a public network and have a private blockchain which is enforceable on a public network. This creates a huge scale as well. This is possible with localized computation. So only the block hashes from the child blockchains are submitted to the root blockchain. This means the root chain only receives a minimum amount of data. This submission is a commitment to block state as well as creates order.
So the child chains do complex computation and value transfers. Only tiny commitments are included in the root chain. The root chain doesn’t bother doing computation unless someone disputes that data. But you need data availability to prove the fraud.
How Plasma creates enforceability
So, for example, you want to transfer something on a child blockchain. It then creates periodically hashes of this block. It then gets committed on the public chain Ethereum. If anyone can publish a proof that the information on this block is invalid, the transfer gets canceled and rolled back.
So this is about the nature of enforceability. This is very important and the core of blockchain. If you have a blockchain that is not enforceable it can’t scale. So this allows you to watch only the changes that affect you. This results in an effective computation. So you map out of the computation and then you reduce it back down to get the results.
So we are talking about a system of blockchains which are not purely a payment mechanism. It is more like a court system. The root blockchain as the supreme court. The child chains are the district and the root blockchain Ethereum is the supreme court. The supreme court doesn’t t look at every single contract. You only go to the court if there is a dispute. Same applies to Plasma. The child blockchain handles the traffic and only when something is incorrect you go to the root chain. So this allows you to do high volume low-cost DApps. As a result, this creates more efficiency and incredible scale.
The Problems of Ethereum Plasma
But there are some problems with Plasma. There is no public release date as yet. In the meantime, other companies and programmers are working on other solutions that don’t have to involve Plasma at all.
Another unsolved problem is how exactly you merge these child chains efficiently. So you have two fast child chains, but they are unable to communicate with each other. This would render Plasma essentially useless.
Another problem is the way that transactions are verified. So all nodes in the world verify together that the transaction is correct. Now, this occurs through the use of a system called proof of work. The PC that this person is using to mine probably has a massive amount of graphics cards and solves complex math problems all day. When he solves these problems they are adding a transaction to the blockchain. But what if somebody owns a majority of nodes that are mining a coin. This is the 51% attack and it actually allows the person to forge transactions.
“Ethereum Plasma” – Summarized:
- Plasma is a construction of blockchains in blockchain.
- Ethereum is the main chain and the others are child chain
- The state of these child blockchains is committed to the root chain Ethereum.
- Child chains process complex computations and value transfers
- Plasma doesn’t require consensus changes to Ethereum, just rules on how to agree on the current state
- If an incorrect state is committed, anyone else can go on the main-chain and disagree and the person gets penalized
- Plasma allows incredibly scalability
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