I got a chat with Diego Gutierrez Zaldivar, co-founder at Rootstock, on the many questions posed online after the company announced its sidechain-initiative claiming to offer something as secure as the Bitcoin Blockchain with as low as 20 second confirmation times (blocktime).
The well-known and pioneering cryptographer Nick Szabo has read the white paper and tweeted about it as follows; “Best of Bitcoin (currency and settlement system) + best of Ethereum (smart contract programming environment)”.
Some takeaways from the chat below are the facts that they plan on using a merged-mining solution (to take advantage of Bitcoin’s processing power and security) while at the same time using a federated system to confirm those fast blocktimes, all the while checkpointing on the main chain (Bitcoin’s).
– I can’t tell you everything about it just yet, Diego said on Skype. We’ll present the white paper in December at La Bit Conference in Mexico City, but I can tell you that we’re using proof-of-work merged-mined with the Bitcoin network, but it’s a hybrid system as there’ll also be a federation. Some of our challenges are more strategic than technical though, but we plan to offer the mining community another way to make money on fees by running Rootstock servers that can handle smart contracts.
How long have you been doing this?
– This is the epitome of many years of work and it’s more or less born out of necessity. We try to see this as financially inclusive for the Bitcoin community as we all have an actual need for a smart contract platform that we can trust in terms of security. There is more than two years of work behind the platform but we made the decision to do it the sidechain way in February last year in a meeting i Palo Alto. At that time we felt all efforts were going away from Bitcoin and that was throwing away a great opportunity and a great user base. This is not about us against Ethereum, there is enough room for every platform to thrive, including Omni and Counterparty. After all we are talking about the operating system of the future, about voting systems of the future.
And how long until launch approximately?
– The idea is to present the white paper in December in Mexico. So far only five people in the world has seen it, including Nick Szabo. We were actually not ready to go online on this until December but was forced out because it became known. And we plan to launch in about six to nine months, but we’ll have intermediate deliveries during that time. We are also delivering proof-of-concepts in December and some prototypes so people see what it is, but I also want to point out that Rootstock has actually been working for two years already. We have a lot of code developed even though sidechains were non-existant when we started with the project. There is some tweaking we have to do but there is a vast knowledge base to publish. This is much more than just Ethereum on a sidechain, our blockchain will have many improvements added by Sergio.
If you compare your solution to Counterparty’s for instance?
– We are not working on the Bitcoin Blockchain directly, that gives us the opportunity to better things that are not going to getting better for a long time in Bitcoin. For example if you want a thin client to handle colored coins, we’ve solved that, also we have confirmation times down to around 20 seconds. That will be an improvement in speed and depending on the environment that can make a big difference.
Pegging? Two-way? How could it be as secure as the Bitcoin Blockchain?
– It’s not a two-way pegging, we have two different solutions, the first one is based on a multi-sig with a tweak as at the moment the usable implementation is at the top 15 signature and above that it becomes unreliable but we have kind of hack – that’s the short-term solution. But we also have a much more complicated solution which will be solved in the next two years as long as we can bootstrap them. It’s based on threshold signatures, partly on research done at the Princeton university.
How can you say that its “as secure” as Bitcoin with shorter confirmation times? That sounds impossible.
– The idea is that you will have checkpoints that are shared with Bitcoin, of course intermediate transactions won’t have the same power or security, but you end up with a solution that is enough. It’s up to you to decide if you want to wait for 1, 2 or 3 confirmations on our blockchain, to wait for a federation checkpoint or to wait for a merged-mined checkpoint with the Bitcoin mining network, contracts can choose what level of security they are comfortable with.
Counterparty utilizes the security of the Bitcoin network, with a token that isn’t pegged to the value of bitcoin. But are roots transferable? Can I sell you my roots?
– We’ll implement a framework to handle user-issued assets that will speed up development in that area. On other platforms user-issued assets are second class, but in Rootstock that is another improvement. Miners are getting roots as reward for running contracts, but can easily convert them to actual bitcoins, which gives the system instant liquidity.
So, the claim that it’s “as secure” as the Bitcoin network should not be mixed up with the claim of shorter confirmation times (If I interpret Diego’s replies correctly). This means that a user of the Rootstock system can choose different levels of security – if he/she wants the same level of security as with Bitcoin he/she needs to wait for the checkpointing with Bitcoin, but if he/she can accept a mix of a federated voting system (Diego declined to explain the type of system used until December) then the 20 second confirmation times can be utilized.
How are the tokens, the fuel (roots) created and how do you prevent overflow/inflation?
– Roots are bitcoins, you don’t create them from scratch, you just send them to a creation-address on the Bitcoin blockchain, and roots are created on the other side. They are supposed to work as fuel for the smart contracts, so the industry can run rootstock servers. We are working very hard to make sure the Bitcoin network is not affected by our merged-mining solution and are confident our implementation will not affect Bitcoin mining. With this solution a Bitcoin miner can run a Rootstock smart contract server and profit from those fees, which will create more profit for miners than they are getting from fees now and that may happen in a very short time. I think we have good timing considering the halving coming up next summer, so that’s also part of our objective – to involve and give the mining community an extra incentive.
And how does Rootstock make money?
– We started with our own funding but now we have a lead investor that’s provided us with enough funds to deliver the commercial beta mid-summer next year. We are very conscious on the real-world needs so we’ll launch not only the platform but also proof-of-concepts and some real-life use cases. Can’t tell you who’s funding it just yet but it’s a mix of investors, some from the Bitcoin industry. We have different models for making money including consultancy, certifications and some fuel is going to come to Rootstock through smart contracts, platforms and services we create.
Here’s the comment thread on Reddit if you’d like to comment.