6 Researchers from Cornell University have shown that Bitcoin, the digital currency that can be used to buy goods and services on the internet, is not only a digital commodity, but also a form of peer-to-peer file sharing.
The team says that Bitcoin could potentially become a major force for sharing information and services as it has for decades, and its blockchain technology could help reduce the friction involved in doing so.
The Cornell researchers have developed a mathematical model of Bitcoin, which they say could help in a number of areas, including blockchain-based peer- to-peer transactions.
It also shows that there is potential for blockchain-enabled software to be used for a variety of applications.
“The blockchain technology can enable the creation of a new kind of distributed computing platform, in which multiple nodes share resources in a shared virtual world,” the researchers wrote in a research paper published in the Journal of Applied Mathematics.
“A network of such distributed computers can act as a ‘virtual computer’ that acts as a shared ‘virtual storage device’ for computing resources.”
The researchers used Bitcoin as a benchmark.
They found that the number of blocks of the blockchain is proportional to the number transactions it processes per second.
“By using a network of nodes, the block size is a function of transaction volume, which depends on the number and the complexity of the transactions,” the paper said.
The researchers then looked at how block sizes varied depending on the characteristics of the network.
The researchers found that a system that processes a large number of transactions would have an increase in the block sizes.
“With a large block size, there is a tendency for the transaction fee to be proportional to transaction volume,” the authors said.
“On the other hand, a small block size would lead to a decrease in the transaction fees.”
The paper also found that block sizes were not static, and that the blockchain could have an effect on the cost of transaction fees.
“If a transaction costs a lot more than the network fee, then the cost is distributed among all the users, but this is not always the case,” the research paper said, referring to the fact that a transaction may be cheaper to perform on a small network compared to a large network.
“For example, if the network fees for a transaction are less than a small number of users, then some of the fees will be distributed among users in proportion to their transaction volume.”
The Cornell team also used Bitcoin’s block size to compare the number-of-blocks to the cost per transaction, and found that, while there was a correlation, there was not much difference.
The authors concluded that the block-size-related costs were not due to a transaction fee.
“While the overall transaction fee might increase as the block grows, the transaction costs are not correlated with the blocksize,” the study said.
“Thus, the cost-effectiveness of the block scaling strategy depends not only on the network size but also on the transaction volume as well.”
The team did not offer any technical solutions to the problems they identified.
“Block scaling does not provide a solution to the issue of transaction malleability and bandwidth utilization,” the Cornell team wrote.
“In fact, if transaction mallability is addressed, the overall network bandwidth usage and transaction fees could be reduced significantly.”