In brief
- BitMEX's parent company, 100x Group, awarded a $40,000 grant to Bitcoin developer Calvin Kim.
- Kim is working on Bitcoin unspent transaction output scaling solution Utreexo.
- The protocol aims to compress the size of UTXOs while maintaining their security.
Crypto exchange BitMEX’s parent company, the 100x Group, has awarded a one-year grant of $40,000 to the developer of Bitcoin (BTC) unspent transaction outputs (UTXOs) scalability solution Utreexo.
Errday we buidling. https://t.co/K7Zt9Ibr9o
— Arthur Hayes (@CryptoHayes) August 24, 2020
An unspent transaction output is created when someone sends a Bitcoin transaction. If they have two Bitcoin and want to send just one, then both coins are moved, one sent to the destination and the other returned to the original person, as a UTXO. It’s just how Bitcoin works.
Essentially, UTXOs are a pool of all currently spendable Bitcoin—or user balances. Every Bitcoin node is required to maintain the current UTXO records to be able to validate new transactions and spend coins.
While these records are much smaller than Bitcoin’s full transaction history—taking up around four gigabytes of space instead of 300 gigabytes—their size may become “a major scalability bottleneck in the future,” according to the blog post.
What is Utreexo?
Developed by Calvin Kim, Utreexo aims to preemptively solve this issue.
“Utreexo is a hash based accumulator, which allows unspent outputs to be compressed into a smaller size. There is no loss of security; instead, the burden of keeping track of funds is shifted to the owner of those funds,” the blog post explained.
“With Utreexo, the holder of funds maintains a proof that the funds exist, and provides that proof when spending the coins,” it added.
Utreexo compresses these proofs to under one kilobyte and provides a long-term scalability solution as their size grows—albeit very slowly, the announcement added.
“It’s great that 100x is not only funding Bitcoin research and development, but also providing support for newcomers to the Bitcoin open source ecosystem,” said Tadge Dryja, a Digital Currency Initiative research scientist at the Massachusetts Institute of Technology who is credited with inventing Utreexo.
In June, BitMEX similarly announced a $100,000 grant to Bitcoin Core researcher and contributor Gleb Naumenko.