Is BTC Being Harmed or Helped by VeriBlock Transactions Occurring On Its Blockchain Network?

BTC developers are reporting that there is an astonishing amount of space that is currently going to waste on the network, as the block space gets used to support cryptocurrencies running on other blockchain platforms. One such company that has been apparently borrowing the space is VeriBlock.

The Bitcoin developers have noted that the firm has been borrowing hashing power from the network in order to enhance the security of some of the vulnerable altcoin chains. While doing so, it appears as though VeriBlock has been filling up much-needed Bitcoin block space.

Source of the now-highest volume of OP_RETURN outputs has been identified as @VeriBlock "proof of proof" miners. They are creating around 20% of all BTC transactions now. Seems inefficient to me; will be interesting to see if the incentives work long term. https://t.co/LpjyhGKg2b

— Jameson Lopp (@lopp) January 5, 2019

VeriBlock, the company in question is said to operate under a concept known as ‘proof-of-proof’. According to representatives from the company, the other ‘proof’ in its concept comes about after it has made use of the hash power provided by the BTC network. According to a report prepared by Forbes, Jeff Garzik appears to be one of the most notable contributors to the VeriBlock project.

Impact On Bitcoin Network

The ETC debacle (Ethereum Classic) recently highlighted that the risk of experiencing a fifty-one percent attack on alternate coins is far much greater as compared to the Bitcoin network. The reason for this being that the smaller networks use very little hashing power to secure their coins.

The fact that they have very little computing power protecting them means that hackers do not need to use a lot of computing power to subvert the rules that have been put into place by the networks. With a fifty-one percent attack, it becomes very easy for the people behind the attack to wreak havoc on crypto and do away with the tokens.

In some cases, this could involve double spending some of the currency units—in essence, this means that the attacker is able to produce tokens for nothing. In a bid to assist altcoins to shore up their security parameters, VeriBlock has come up with a technique to use Bitcoin’s hashing power to secure these smaller networks.

In order to achieve its objective, VeriBlock has to resort to the use of OP-Return transactions. These transactions are then added to the transactions already taking place in the Bitcoin network. Many developers are raising alarm because the company has not yet gone live on the primary network and its effects have already started to be experienced.

Jameson Lopp, a Bitcoin developer and CTO of Casa recently stated that this particular startup was already responsible for more than twenty percent of all the transactions occurring on the network. Although it is not possible to stop the company from using the blockchain in this manner, many developers are afraid that in the long-term, the new transactions will likely reduce the networks’ utility.

This means that with every twenty percent block space that is being filled by the startup, it may eventually prove to be highly detrimental to the operations of a network that has come to be seen as the industry leader. This is primarily due to the fact that it continues to divert human and economic interests from the Bitcoin network.