[bitcoin-dev] Increasing the blocksize as a (generalized) softfork.

[joe2015 at openmailbox.org]

This is a draft.

--joe

Introduction
============

It is generally assumed that increasing the blocksize limit requires a
hardfork.  Instead we show that a increasing the limit can be achieved 
using a
"generalized" softfork.  Like standard softforks, generalized softforks 
need a
mere miner majority (>50% hashpower) rather than global consensus.

Standard Softforks
==================

After a softfork two potential chains exist:

* The new chain B3,B4,B5,... valid under the new rules and old rules.
* The old chain B3',B4',B5',... valid under the old rules only.

E.g.

                       +-- B3 --- B4 --- B5
                       |
     ... -- B1 -- B2 --+
                       |
                       +-- B3' -- B4' -- B5' -- B6'

Assuming that >50% of the hashpower follow the new rules, the old chain 
is
doomed to be orphaned:

                       +-- B3 --- B4 --- B5 --- B6 --- B7 --- B8 --- ...
                       |
     ... -- B1 -- B2 --+
                       |
                       +-- B3' -- B4' -- B5' -- B6' (orphaned)

Hardforks may result in two chains that can co-exist indefinitely:

                       +-- B3 --- B4 --- B5 --- B6 --- B7 --- B8 --- ...
                       |
     ... -- B1 -- B2 --+
                       |
                       +-- B3' -- B4' -- B5' -- B6' -- B7' -- B8' -- ...

Generalized Softforks
=====================

A *generalized* softfork introduces a transform function f(B)=B' that 
maps a
block B valid under the new rules to a block B' valid under the old 
rules.

After a generalized softfork three chains may exist:

* The new chain B3,B4,B5,... valid under the new rules only.
* The mapped chain f(B3),f(B4),f(B5),... valid under the old rules.
* The old chain B3',B4',B5',... valid under the old rules only.

E.g.

                       +-- B3 ---- B4 ---- B5
                       |
     ... -- B1 -- B2 --+-- f(B3) - f(B4) - f(B5)
                       |
                       +-- B3' --- B4' --- B5' --- B6'

This is "generalized" softfork since defining f(B)=B (identity function)
reduces to the standard softfork case above.

As with standard softforks, if the majority of the hashpower follow the 
new
rules then the old chain B3',B4',B5',... is doomed to be orphaned:

                       +-- B3 ---- B4 ---- B5 ---- B6 ---- B7 ---- ...
                       |
     ... -- B1 -- B2 --+-- f(B3) - f(B4) - f(B5) - f(B6) - f(B7) - ...
                       |
                       +-- B3' --- B4' --- B5' --- B6' (orphaned)

Example:
--------

Segregated Witness can be thought of as an example of a generalized 
softfork.
Here the new block format consists of the combined old block and witness 
data.
The function f() simply strips the witness data to reveal a valid block 
under
the old rules:

     NewBlock := OldBlock ++ Witness
     f(NewBlock) = OldBlock

An Arbitrary Block-size Increase Via a Generalized Softfork
===========================================================

Segregated Witness only allows for a modest effective blocksize increase
(although there can be other motivations for SW, but that is off-topic).

Instead we engineer a generalized softfork that allows an arbitrarily 
increase
of the blocksize limit.  The proposal consists of two parts: (a) new 
rules for
valid blocks, and (b) a transformation function f().

The new block rules are very similar to the old block rules but with 
some
small changes.  In summary the changes are:

* The MAX_BLOCK_SIZE limit is raised to some new limit
   (e.g. 8Mb, BIP101, 2-4-8, BIP202, etc., or some other limit)
* The MerkleRoot field in the header has been re-interpreted.
* The CoinBaseTx must obey some additional new rules.

As with old blocks, a block under the new rules consists of a block 
header
followed by a vector of transactions [CoinBaseTx, Tx1, .., Txn], i.e.

     NewBlock := BlockHeader ++ NumTx ++ CoinBaseTx ++ Tx1 ++ .. ++ Txn

The block header format is the same as under the old rules defined as 
follows:

     
+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+
     |  Ver  |                        PrevHash                            
    |
     
+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+
     |                           MerkleRoot                          | 
Time  |
     
+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+-+
     | Bits  | Nonce |
     +-+-+-+-+-+-+-+-+

Under the old rules MerkleRoot is the Merkle root of the hashes of all
transactions included in the block, i.e.

     MerkleRoot = merkleRoot([hash(CoinBaseTx), hash(Tx1), .., 
hash(Txn)])

Under the new rules we instead define:

     MerkleRoot = merkleRoot([hash(CoinBaseTx)])

That is, under the new rules, MerkleRoot is the Merkle root of a 
singleton
vector containing the CoinBaseTx hash only.

In order to preserve the security properties of Bitcoin we additionally
require that the CoinBaseTx somehow encodes the Merkle root of the 
remaining
transactions [Tx1, .., Txn].  For example, this could be achieved by 
requiring
a mandatory OP_RETURN output that encodes this information, e.g.

     OP_RETURN merkleRoot([hash(Tx1), .., hash(Txn)])

Alternatively the Merkle root could be encoded in the coinbase itself.  
This
ensures that new transactions cannot be added/deleted from the block 
without
altering the MerkleRoot field in the header.

Aside from these changes and the increased MAX_BLOCK_SIZE, the new block 
must
obey all the rules of the old block format, e.g. valid PoW, have valid 
block
reward, contain valid transactions, etc., etc.

In order to be a generalized softfork we also need to define a mapping 
f()
from valid new blocks to valid blocks under the old rules.  We can 
define this
as follows:

     NewBlock    := BlockHeader ++ NumTx ++ CoinBaseTx ++ Tx1 ++ .. ++ 
Txn
     f(NewBlock) := BlockHeader ++ 1 ++ CoinBaseTx

That is, function f() simply truncates the block so that it contains the
coinbase transaction only.  After truncation, the MerkleRoot field of 
the
block header is valid under the old rules.

The proposed new rules combined with the transformation f() comprise a
generalized softfork.  After the fork a new chain B3,B4,B5,... will be
generated under the new rules defined above, including an increased 
blocksize
limit.  This new chain can be mapped to a valid chain 
f(B3),f(B4),f(B5),...
under the old rules.  Assuming that >50% of the hashpower has adopted 
the new
rules, the mapped chain will orphan any competing chain under the old 
rules,
just like a standard softfork.

An interesting consequence of this design is that, since all mapped 
blocks are
empty, old clients will never see transactions confirming.  This is be a
strong incentive for users to update their clients.

Conclusion
==========

Conventional wisdoms suggests that increasing the blocksize limit 
requires a
hardfork.  We show that it can instead be achieved using a generalized
softfork.  Like with a standard softfork, a generalized softfork merely
requires a majority (>50%) of hash power rather than global consensus.
Experience has shown that the former is significantly easier to achieve.

Future Work
-----------

Investigate other kinds of hardforks that can instead be implemented as
generalized softforks, and the security implications of such...

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