Vitalik Buterin Proposes Using Bitcoin Cash As Data Layer for Ethereum

Ethereum (ETH), the world’s largest platform for building and deploying decentralized applications (dApps), is currently facing significant scalability problems. This, as the size of the Ethereum blockchain has grown much larger than what the project’s founders may have anticipated - when the smart contract platform was first launched around five years ago.

Bitcoin Cash (BCH) May Serve As Data Layer for Ethereum?

In order to address Ethereum’s scalability challenges, Vitalik Buterin, the Co-Founder of Ethereum, suggested using blockchain networks that have relatively lower transaction fees.

Buterin argued that Ethereum could leverage smaller blockchain-based platforms by using them as a data layer. According to Buterin’s assessment, Bitcoin Cash (BCH) may “fit the bill perfectly” as it has a relatively high data throughput rate.

Bitcoin Cash Blockchain’s Throughput Rate Is Almost 7x Greater than Ethereum

Currently, the Bitcoin Cash blockchain can process around 32 MB of data in roughly 600 seconds, which is equivalent to about 53,333 bytes/second. This is almost 7x faster than Ethereum’s processing capacity - as the leading smart contract platform can only handle around 8 kilobytes (8,000 bytes) per second.

While the Bitcoin (BTC) blockchain may have the highest level of security, transaction fees on its network might be too high for it to be practically used as a data layer. Meanwhile, the Bitcoin Cash network may be more suitable for data processing as its transaction fees are considerably lower (at present) than most major crypto networks.

Might Be Easy to Validate BCH Blocks Inside Ethereum

Online tools such as BTCRelay may allow developers to easily verify Bitcoin Cash blocks inside of the Ethereum network. According to Buterin, the tool would just have to be repointed toward the Bitcoin Cash blockchain, in order to validate transaction data. The BCH network appears to be well-suited for this process due to its low transaction fees.

Although the BCH network may seem ideal as a data layer, Buterin noted that the cryptocurrency’s 10 minute block times may be considered its biggest weakness. However, the Russian-Canadian programmer believes this issue may be resolved in the forseeable future.

Ethereum Classic Blockchain May Be “Another Natural Alternative”

Notably, Buterin said that the Ethereum Classic (ETC) blockchain might be “another natural alternative”, however it’s not as scalable when compared to the Bitcoin Cash network.

As noted by Buterin: 

There’s a large space of quite powerful and effective scalability solutions that rely on a non-scalable computation layer (ie. the current ethereum chain suffices) plus a scalable data layer.

By using “interactive” computation techniques, like Truebit, developers are able to compute the current state on “the Ethereum side.” This process depends on the “data availability verification guaranteed by the data layer”, which ensures that “fraudulent” submissions can be “detected and heavily penalized”, Buterin wrote on the EthResearch forum website.

A Temporary Solution Until Ethereum 2.0 Is Launched

He also clarified that potentially using Bitcoin Cash or Ethereum Classic as data layers would be a short-term or temporary solution. This, as Ethereum 2.0, a major system-wide upgrade, will be released in order to improve the overall efficiency of the world’s largest dApp development platform.