MIT researchers’ new cryptocurrency consumes 99% lesser data than Bitcoin

MIT researchers have developed a new cryptocurrency that drastically reduces the data users need to join the network and verify transactions by up to 99% compared to the current popular cryptocurrencies.

Cryptocurrencies, such as the popular Bitcoin, are networks built on the blockchain, a financial ledger formatted in a sequence of individual blocks, each containing transaction data.

To join a cryptocurrency, new users must download and store all transaction data from hundreds of thousands of individual blocks. They must also store these data to use the service and help verify transactions. This makes the process slow or computationally impractical for some.

In a paper to be presented at the forthcoming Network and Distributed System Security Symposium, the researchers introduced Vault -- a cryptocurrency that lets users join the network by downloading only a fraction of the total transaction data.

It also incorporates techniques that delete empty accounts that take up space, and enables verifications using only the most recent transaction data that are divided and shared across the network, minimising an individual user's data storage and processing requirements.

"The paper title is a pun. A vault is a place where you can store money, but the blockchain also lets you 'vault' over blocks when joining a network," said Derek Leung, a graduate student in the Computer Science and Artificial Intelligence Laboratory (CSAIL) at the MIT.

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"When I'm bootstrapping, I only need a block from way in the past to verify a block way in the future. I can skip over all blocks in between, which saves us a lot of bandwidth."

In experiments, Vault reduced the bandwidth for joining its network by 99 per cent when compared to Bitcoin and 90 per cent when compared to Ethereum, which is considered one of today's most efficient cryptocurrencies.

Importantly, Vault still ensures that all nodes validate all transactions, providing tight security equal to its existing counterparts.

The researchers built their system on top of a new cryptocurrency network called Algorand, which is secure, decentralised, and more scalable than other cryptocurrencies.