zkTube – A Solution to the Scaling Issues of the Ethereum Platform

Financial regulations sometimes are a hindrance to the introduction of cutting-edge technology. institutions faced with the cost of implementation prefer to stay with the tried and tested rather than the cutting-edge innovative. In general, blockchain technology simplifies the implementation of three concepts that form the backbone of most financial regulations: Transparency, security, and traceability. The only problem is the ability to scale up to cope with a large number of transactions, zkTube addresses that problem.

The world of blockchain applications is getting more and more crowded. Ethereum, the largest blockchain platform currently in operation, is getting more and more congested. Ethereum manages the congestion by increasing its transaction fees, which has forced a number of ecosystems with low-value transactions to seek alternatives.

Scaling public blockchain is an issue that slows down the development of more blockchain solutions. There is the conflicting requirement of meeting the demand of millions of users without sacrificing decentralization or other features of a blockchain environment, such as safety and transparency. So far, existing scaling solutions have compromised one of the features of a blockchain environment.

The transparency nature of blockchain technology is critical in financial applications. Every step of a transaction can be traced. Scaling has been the major problem in developing solutions to mainstream financial issues using blockchain technology. A blockchain-based decentralized payment system would have many advantages and would be a natural implementation of the technology in the financial world. Before zkTube, scaling and the congestion of a major platform made it very difficult to develop and implement such a system. zkTube supplements and strengthens existing application functions by providing fast, safe, reliable, and high-performance services. zkTube solves the scaling issues and is able to cope with a level of traffic that is comparable to the transaction throughput generated by traditional VISA cards. Therefore, it enables the development of a blockchain-based payment platform that can be used for frequent relatively small value transactions such as grocery purchases. It also makes it possible to have a debit card associated with a crypto-currency and process payments without converting the cryptocurrency to a fiat currency like many Bitcoin-based cards are doing.

PayTube Wallet is an application in the zkTube network. It allows users to access any Decentralized App in the Ethereum network. It is the crypto equivalent of a wallet containing fiat currencies. Users will be able to have a positive balance in their wallet and use that balance to buy or sell crypto-currencies among other things. PayTube and the ability of the zkTube network to process large numbers of transactions will make it easier to have a crypto-ecosystems where participants can use crypto-currencies to pay for purchases, receive payments, etc.

ZK stands for Zero-Knowledge, a protocol that derives its name from an encryption logic based on a method, where party A proves to party B that a statement is true by simply saying that it is true without revealing any additional information. A Zero-Knowledge protocol is based on three properties:

(1). Completeness – If the statement is true, the honest verifier will be convinced by the honest provider.

(2). Soundness – If the statement is false, the ‘dishonest’ provider cannot convince the verifier that it is true. There is only a negligible probability of the contrary.

(3). Zero-Knowledge – If the statement is true, no cheating verifier learns anything more than the fact that it is true.

A decentralized merchant payment system powered by zkTube will be able to process a high volume of transactions. The transparent nature of blockchain makes tracing every step of the commercial transaction very easy. In case of problems, it will be fairly straightforward to trace all the steps from the customer making the purchase to the merchant receiving the payment.

A zkTube enabled merchant payment system will be a game-changer for the implementation of blockchain-based solutions in the retail world in general and specifically in retail finance. Still, it is not its only potential area of implementation. zkTube solution can be implemented in any ecosystem where a large number of transactions need to be processed reliably, accurately, and promptly. For instance, the regulatory requirements for capital markets transactions in many jurisdictions of the world (e.g., Europe with MiFID or EMIR, the US with Dodd-Frank) require handling many transactions in real-time or with a short delay from real-time. Blockchain technology is perfect to handle transactions in a secure, transparent, accountable way. Transactions that cannot be canceled (i.e. removed from the system) and must be modified, i.e. either flagged as canceled, closed early, or balanced by a complementary matching transaction, are perfect for the technology. The same restrictions mentioned above presented a huge limitation for the development of blockchain-based transaction management solutions. For instance, a sale mistakenly recorded as 80 instead of 18 cannot be deleted after being reported; you need to create a fictitious balancing transaction of 62. It is an environment that is perfect for blockchain-based solutions but has been slow in adopting them because of the difficulties of handling large-scale transactions in a secure, reliable and fast way.

Feature that a decentralized structure can manage very well. Reporting transactions where shares or bonds are bought and sold is an example where financial institutions using algorithmic or computer-based trading need to process a lot of transactions in a short time. Still, the regulatory environment around the reporting of repurchase contracts, swaps, and other derivatives has scenarios where specific stakeholders face a concentration of transactions received from several institutions and need to be processed quickly. Both these examples require solutions that do not allow unauthorized individuals to make illegitimate changes that would modify the representation of what happened (i.e. the transaction), demand transparency and need to be reported. Still, before the zkTube solution, the high volume of transactions to be processed in a relatively short time (seconds in the case of reporting) was making a blockchain-based solution improbable.

zkTube solution can also be used in scenarios where a large number of transactions simply need to be collected to be analyzed. For instance, Anti Money Laundering or Market Abuse investigations, collect a large number of transactions to be processed to identify improper actions. It is not a case of processing information but simply collecting it during a very short space of time. The critical success factor of this process is not processing information to achieve a result; large volumes of data need to be assessed reliably and transparently in a relatively short time.

Beyond the financial world, the zkTube platform solves a bottleneck that has slowed down the introduction of decentralized solutions in many business fields. Now, it will be possible to process a large number of transactions in a safe, accountable, and transparent way.

zkTube technical feature can be found in a white paper that is downloadable from

https://zkTube.medium.com/zkTube1-0-whitepaper-8d942cbd30a3