Sergio Demian Lerner is chief scientist at Rootstock Software, manufacturer of potent Cloud ERP Solutions. He disclosed a new scaling solution for Bitcoin known as Lumino. A whitepaper about this solution came out to introduce the Lumino Transaction Compression Protocol (LTCP).
Lumino refers to a hub-and-spoke network utilizing off-chain payments like the Lightning Network (SegWit) with slight improvements. The difference is, Lumino is depending on its protocol as core procedure tier. This stratum drastically augments settlements and payment outlet top-ups on-chain transactions are capable of handling.
Lumino is an innovative model of off-chain payment channel platform that utilizes compressed transactional data in Bitcoin Blocks. According to Mr. Lerner, Lumino is a new and essential component of the RSK Blockchain primary platform. This is a decentralized Bitcoin side chain that can accommodate a huge amount of the crypto-currency transactions per second compared to Lumino.
Said protocol creates smaller BTC transactions which mean a maximum of 100 can be processed by the network per second. This is a clear improvement of the transaction limit by up to 33 times. The RSK platform’s extension was made for Blockchain with quick Block rates as well as account-based ledgers. This includes Bitcoin but follows the Ethereum model. Lumino connects the two digital currencies taking advantage of Ethereum scaling benefits into Bitcoin Blocks.
Lumino comes as transaction compression technique which permits processing of higher volumes of transactions although it preserves less information. It is an option for scaling Blockchain that attains significant compression ratios. Lerner describes this as Delta Compression of preferred fields from preceding referenced transactions and collective signing of past transactions so these signatures can be eliminated.
Restructuring upgrading of Lumino can enable the Bitcoin to reach at least 100 transactions per second. This, of course, will depend on the pattern of usage. The LTCP protocol can make it possible for Lumino to access a billion involved users. These are envisioned as gains that will occur quickly minus upgrading and the risks of a Hard Fork (BTC Code). However, the number of users Lumino can deal with is not easy to forecast.
Taking for granted one payment channel uses up a minimum of 150 Bytes and each user completes and settles the payment conduit monthly, it is possible for the Lumino Network to serve these 1 billion users within four years. This is as decentralized network depending on hardware resources available for home-based computers with high-capacity SSD Drives.
Those estimates are far beyond the benefits of scaling solutions like Segregated Witness (Lightning Network). Yet, it still remains to be seen if Lumino can work with other networks without inconsistencies or conflicts. The biggest downside of Lumino is transaction confidentiality. Transaction compression is data reprocessing. The higher compression of Lumino Network is an exchange for reduced privacy. Minimal amounts of reused data refer to linking payments for users.
Lerner says the trade-off is the choice of individual users. The volume of trade-off relies on usage. LTCP allows storage compression with resource blockages such as bandwidth and CPU use. Another trade-off is usage of the Bitcoin OP Return Field. These fields can be kept in an OP_RETURN output of the CoinBase transactions. Once Lumino becomes part of Bitcoins Protocol, said services may not be able to take advantage of any upgrades without re-writing platforms for other techniques.
Bitcoin Soft Fork
Lerner concludes Lumino must be introduced to BTC as a Soft Fork which is backward compatible. The Whitepaper explains what it takes to execute Lumino into Bitcoin. There must be account address space specifically for the side chain inserted into the Bitcoin as extension block. Therefore, the BTC nodes can process Lumino transactions right away. This will, in turn, reduce the amount of space every transaction in one Block uses significantly. The Soft Fork upgrade Lumino will not benefit from the space savings of SegWit.
Lerner also emphasized that Segregated Witnesses and Lumino are matching scaling proposals. SegWit uses Soft Fork rather than Hard Fork to increase capacity. It is not even a solution for scaling although SegWit introduces improvements. LTCP is able to scale more since its account-based ledger pattern uses three times smaller transactions. Besides, LTCP gets rid of previous signature data and recovers nearly 64 percent of extra space.
If the designs of Lumino are compared to LTCP and Bitcoin without RSK as well as Lightning Network over Segregated Witness over Bitcoin, Lumino will emerge apparently as a more potent and smart solution. The difference is Lumino and LTCP Soft Fork has not yet been put into practice while SegWit has been fully operational.
Lumino is much like the Lightning Network. Both of them enable millions of payments for every second. This goes back to the number of active users who can be served per second and not the transactions involved.
Mr. Lerner added that a decentralized system can serve around 6.3 billion users in the near future. Scaling solutions can complement one another so it is impossible to say if one is better than the other. Outcomes will depend on successes and failures of each solution at this point.
Lerner answers the questions of stakeholders on whether there is a scaling solution he deems better than Segregated Witness. No concrete solution can be formulated as of now, but there is a guide on how scaling can be undertaken.