Have you ever wondered how Bitcoin could compete with the world’s banking exchange systems, where billions of transactions are processed every year? Two Bitcoin programmers proposed a second-layer solution called CoinPool, which in theory could radically change the scope of the number of transactions in this P2P network.
In a proposal posted on the mailing list of the Linux Foundation and the Bitcoin Core developers group, the programmers Ruben Somsem and Gleb Naumenko explained CoinPool, a protocol for confirming transactions outside the Bitcoin main chain.
Bitcoin can process around 300,000 transactions every day or around 7 transactions per second. In September last year, the Lightning micropayment network processed about 700,000 transactions, with potential future growth that could be exponential.
However, the demand for bitcoin exchanges is hampered by the current state of the networks, either by the number of nodes contributing to exchanges on Lightning or by Bitcoin’s architecture, which does not allow for such accelerated growth.
This is where CoinPool comes in, since this new protocol would allow its users to transact outside the Bitcoin blockchain through a shared ownership UTXO (Unspent Transaction Output), which represents an output transaction that has not been spent. This single transaction makes it possible to establish who owns each coin at the time of an exchange.
According to Somsem and Naumenko, the CoinPool protocol would allow many people to share the same UTXO and “make an instant connection off-chain”, so that transfers could happen inside the UTXO.
The paper explains that withdrawals could be made at any time without permission from other users. In addition, it suggests that this technology would allow accounts in one pool or specific group to connect to other pools, including the Lightning network, to pay or fund exchange channels on that other network.