I was thinking about how to scale the block-chain.

The fundamental problem is that if the miners add capacity it will only increase (protect) their share of block reward, but does not increase the speed of transactions. This will only raise the fee in the long run with the block reward decreasing. 

The throughput is limited by the block size and the complexity. Changing any of variables in the above equation was raised already many times and there was no consensus on them. 

The current chain is effectively single threaded. If we look around in the sw industry how single threaded applications could be scaled, one viable option emerge: horizontal scaling. This is an option if the problem can be partitioned, and transactions in partitions could be processed alongside. 

Number of partitions would be start with a fairly low number, something between 2-10, but nothing is against setting it to a higher number later on according to a schedule.

Partitioning key alternatives:

Ordering on inputs: 

1) In this case transactions would need to be mined per input address partition. 

2) TX have inputs in partition 1 and 2, then needs a confirmation in both partitions. 

3) All partitioned chains have the same longest valid approach.

4) Only one chain needed to be considered for double spending, others are invalid in case they contain that input.

This opens up questions like:

- how the fee will be shared? Fees per partition?

- Ensure a good hash function which spreads evenly, because the inputs cannot be manipulated for load balancing

- What to do about half mined transactions (Maybe they should be two transactions and then there is less effect about it, but payment won't be atomic in both partitions)

1) Transactions would be partitioned by their TX-id. Maybe a field allowing txid-s to match a given partition.

2) Creating blocks like this parallel would be safe for bonefide transactions. A block will be created each 10 mins.

3) In order to get malicious/doublespent transactions out of the system another layer must be introduced. 

- This layer would be used to merge the parallel blocks. It would have to refer all previous blocks considered for unspent inputs.

- Most of the blocks will merge just fine as normally block 1 and block 2 would not contain double spending. (of course malicious double spending will revert speed to current levels, because the miner might have to drop a block in the partition because it contains a spent input on another stronger branch)

- The standard longest chain wins strategy would be used for validity on the meta level

- Meta does not require mining, a branches can be added and they are valid unless there are double spent inputs inside. Block inside this meta already "paid for".

Generally both ways would have an effect on the block reward and complexity, which is needs to be adjusted. (not to create more BTC at the end, reduced hashing power on partitions.)

Activation could be done by creating the infrastructure first and using only one partitions only, which is effectively the same as today. Then activate partitions on a certain block according to a schedule. From that block, partition enforcement will be active and the transactions will be sorted to the right partition / chain.

It is easy to make new partitions, just need to activate them on branch block number. 

Closing partitions is a bit more complex in case of TX partitioned transactions, but managed by the meta layer and activated at a certain partition block. Maybe it is not even possible in case of input partitions.

I could imagine that it is too big change. Many cons and pros on partition keys.

What is your opinion about it?

Cheers,

Tamas