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Vitalic Buterin Introduces Blockchain Scaling Solution That Could Make Exchanges ‘Hack Resistant’

On Friday, March 9, V. Buterin, co-founder of Ethereum, introduced a Blockchain scaling solution called Plasma Cash, an even “more scalable” version of an existing solution called Plasma, during a conversation live streamed on YouTube at the Ethereum Community Conference in Paris, France.

Plasma Cash was created by Buterin and developers D. Robinson and K. Floersch.

Actually, Plasma is an on-chain scaling solution for Blockchains, presented by Buterin and Lightning Network creator Joseph Poon in August 2017. Plasma works by optimizing information that is passed onto the root Blockchain, reducing the transaction fees for smart contracts and decentralized apps.

According to Buterin, the difficulties with the scalability of Plasma, is that every customer must download and authenticate each Plasma block, which averts significant scaling.

In order to describe the Plasma Cash model, Buterin gives the instance that if a user deposits some amount of ether to a crypto exchange or any third party service, a Plasma coin would be made with the same value of ether and a unique ID that cannot be merged or split up.

Unlike Plasma, Plasma Cash would only demand customers to pay attention to the blocks that contain coins they want to keep track of:

“A user actually only needs to verify the availability and correctness of the Plasma chain only […] at the specific index of the coin, of any coins that they own and any coins that they care about.”

If we talk about current practical apps of Plasma Cash, Buterin sees an opportunity for crypto exchanges to take privilege of the technology to make themselves more “hack resistant”.

As each Plasma coin has its holder, the coins are not completely replaceabe or exchangeable: nobody can take another user’s coin without the holder of the coin being alerted. In this case, the coin’s holder would avert the potential cheating withdrawal through the “complaint system” by presenting their “proof data” for their coin’s history.

Buterin notes that even if a fraud occurs on an exchange using Plasma Cash, customers will not lose their money:

“Regardless of what happens in the exchange, users can run their money through the Plasma exit procedure and get their money out.”

Buterin ends his performance with a positive forecast for the future use of Plasma Cash:

“Whenever the next big multi-billion dollar exchange written by a totally incompetent developer gets hacked, no one will lose any money.”

Segregated Witness (SegWit), a scalability solution for Bitcoin (BTC), has recently been executed across a number of crypto exchanges. The Bitfinex exchange declared the realization of SegWit on Feb. 20, and the crypto exchange and wallet Coinbase deeclared their SegWit realization on Feb. 23. The Bitcoin Core customer version, which completely bosts SegWit technology, was officially published on Feb. 26.