Bitcoin’s Growing UTXO Problem and How Utreexo Can Help Solve It


Scalability remains to be a degree of concern for Bitcoin — however intelligent minds proceed to provide revolutionary proposals to resolve bottlenecks.

One of many particular scalability considerations is the expansion of the unspent transaction output (UTXO) knowledge set held by Bitcoin nodes. That is the listing of all (fractions of) bitcoin in existence and particulars on how it may be spent. Sadly, this listing tends to develop over time, significantly as new customers enter the system — they’ll have their cash mirrored in UTXOs as properly.

In an try to deal with this rising downside, Tadge Dryja of MIT Media Lab’s Digital Foreign money Initiative (and co-author of the Lightning Community white paper) has proposed a hash-based accumulator he calls the “Utreexo” answer.

The Problem

A person’s bitcoin steadiness is the sum of all of their UTXOs. If you make a transaction, your pockets utility will “rummage” by way of the gathering of your UTXOs to search out sufficient funds to cowl the transaction. The transaction (when confirmed on the blockchain) then basically “destroys” the UTXOs used, and “creates” new UTXOs: now managed by the recipient of the transaction, for them to make use of within the subsequent transaction.

Bitcoin nodes additionally retailer your complete UTXO knowledge set as a solution to know which outputs from earlier funds haven’t but been spent, figuring out which UTXOs are nonetheless obtainable. Each time they obtain a brand new transaction from the community, they examine that transaction towards the listing of UTXOs to make it possible for the cash which might be being spent within the transaction actually exist, and that they haven’t already been spent. If the transaction is legitimate, they replace their UTXO knowledge set.

Bitcoin nodes, subsequently, have two massive knowledge units to retailer: the blockchain and the UTXO listing. The blockchain is over 230 gigabytes on the time of writing, and it’s rising at a predictable tempo. Customers that want to not retailer this knowledge can “prune” (delete) previous blockchain knowledge: They’ll nonetheless know which cash are spendeable because of the UTXO listing. Nonetheless, there are already almost 60 million UTXOs at current, with no true incentives in place to cease the listing’s development fee. And this knowledge can’t be deleted as a result of nodes want it to inform which new transactions are legitimate.

Because the variety of Bitcoin customers is rising and the UTXO knowledge set is rising, it’s changing into a major issue within the rising necessities to run a full node. In the long run, this downside is even perhaps larger than the expansion of the blockchain.


Bitcoin builders have been conscious of the UTXO downside for years and have proposed a number of options. Latest analysis has proposed using cryptographic accumulators, a “cousin” of the Merkle Tree. The place a Merkle Tree hashes the information collectively right into a single hash, an accumulator multiplies the information right into a single sum of knowledge of mounted measurement: a “root.” Together with another knowledge — a “proof” — an accumulator lets customers examine that a particular piece of knowledge is “saved” throughout the root.

The thought behind Dryja’s Utreexo challenge is to create one other kind of pruning however for the UTXO set. Utreexo makes use of an accumulator to create a root of the UTXO set. By storing solely this sum as a substitute of the total UTXO set, the accumulator retains RAM and disk storage at lower than a kilobyte of knowledge. Nodes that use this Utreexo accumulator are referred to as “compact nodes.”

When a brand new transaction is created by a compact node and transmitted over the community, it sends the inclusion proof together with the transaction. From then on, every compact node forwards the transaction and the proof to different compact nodes. Since each compact node has the identical accumulator state and root, the proofs are the identical for every node. All of the compact node does is ahead the very same message to its friends.

As soon as the transaction is included in a block, they discard all of the proof knowledge. Which means that the compact nodes can preserve transactions and inclusion proofs of their mempool, however by no means really write to the arduous drive.  

Bridge Nodes

However what occurs when a transaction isn’t created by a compact node?

Though compact nodes can simply talk these transactions to at least one one other, not everybody will preserve a compact node. To permit compact nodes to speak with full nodes, Utreexo additionally introduces the thought of a “bridge node.” The bridge node shops the blockchain and your complete UTXO set. 

This bridge node is a crucial “bootstrap” to the prevailing community. Compact nodes can’t obtain transactions from normal full nodes straight as a result of the usual node gained’t ship inclusion proofs. When a full node sends a transaction to a compact node, it first passes by way of the bridge node. The bridge node seems up the UTXO, builds a proof from its accumulator, and forwards each the transaction and proof to the compact node. The compact node checks the forwarded inclusion proof to its personal accumulator of proofs and validates the transaction if it matches. 

An vital word is that the bridge node is simply wanted in a single route. Compact nodes are in a position to ship transactions on to full nodes. Though compact nodes retailer much less knowledge, the messages between compact nodes comprise all the knowledge that full node messages do, along with the inclusion proofs. If a compact node needs to ship a transaction to a full node, all they need to do is omit the inclusions proof and the usual full node will settle for the transaction.


Utreexo does include a trade-off.

There are considerations over the potential centralization of nodes if Utreexo had been to turn into extensively used. Bridge nodes would really require extra storage than conventional full nodes, since they’d require them to retailer not solely the common UTXO set, but in addition the inclusion proofs that they ahead to compact nodes. The query stays whether or not or not there can be sufficient “good Samaritans,” with no direct monetary incentives, to run these bridge nodes.

It also needs to be famous that Utreexo remains to be a piece in progress. There are presently no concrete plans to have it included in Bitcoin Core, however as it isn’t a consensus change, any particular person or entity may proceed with it.

The submit Bitcoin’s Growing UTXO Problem and How Utreexo Can Help Solve It appeared first on Bitcoin Journal.

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