New Bitcoin Improvement Proposal Could Reduce Transaction Bandwidth By 75%

Prominent Bitcoin Core developers Dr. Pieter Wuille and Greg Maxwell have authored a Bitcoin Improvement Proposal (BIP), which involves the development of a relay protocol that would effectively reduce the “transaction bandwidth” size used by the Bitcoin (BTC) network.

Referred to as Erlay, the BIP has also been developed with contributions from Gleb Naumenko, a researcher at the University of British Columbia. According to the proposal’s specifications, its activation will lower the amount of bandwidth required to process bitcoin transactions by approximately 75%.

Saving “75% Overall Bandwidth Compared to the Current Bitcoin Protocol”

As explained by Naumenko in an email sent to CoinDesk:

The main idea [behind Erlay] is that instead of announcing every transaction to every peer [on the Bitcoin network], announcements are only sent directly over a small number of connections (only 8 outgoing ones). Further relay is achieved by periodically running a set reconciliation protocol over every connection between the sets of withheld announcements in both directions.

Naumenko, a former software engineer at Blockstream, also mentioned that implementing the new BIP will “save half of the bandwidth” consumed by Bitcoin network nodes. Additionally, integrating Erlay will allow “increasing connectivity almost for free, and, as a side effect, better withstand timing attacks”, Naumenko revealed.

He added that if the BTC blockchain’s “outbound peer count were increased to 32,” Erlay would be able to “save around 75% overall bandwidth compared to the current protocol.”

As noted by the BIP’s authors, an important result of the latest BIP is that it would allow Bitcoin network nodes to increase the number of active connection they have with other nodes. This, the proposal’s developers noted, would be possible if/when Erlay is integrated into the Bitcoin protocol.

“Hardening” Bitcoin Ledger Against Attacks

Currently, the Bitcoin blockchain’s security depends, to a certain extent, on the decentralized network’s participating nodes. Given Erlay’s ability to potentially increase the number of connections between the cryptocurrency platform’s nodes, the protocol’s developers believe it will “harden” the Bitcoin blockchain against malicious attacks.

As detailed by Naumenko:

The most trivial example is Eclipse attack, when a target node gets isolated from the longest chain, because all its connections are established with an attacker. In this case, an attacker, for example, can make a target node believe that they paid that target node (show shorter chain with that [transaction] in), without actually submitting transactions to the longest chain.

Commenting further on how and when Erlay may be added to Bitcoin Core’s codebase, Naumenko said he had dicussed the BIP with several other Bitcoin developers. He revealed that the overall feedback he received was “generally positive.” However, most BTC contributors think more experiments and testing is required before integrating Erlay into bitcoin’s codebase.