Coinbase Accused of Technical Incompetence After Hoarding Millions of UTXOs
The Coinbase development group was accused of “technical incompetence” after collecting countless UTXOs through careless housekeeping. Unspent Transaction Outputs, or UTXOs, will be the shift that is left after sending a bitcoin payment. Wallet providers should sweep up these loopholes and package them in with prospective trades. Coinbase, it transpires, has been hoarding its, making a costly digital wreck, also raising questions concerning its willingness to implement scaling alternatives.
Dust Collectors Par Extraordinaire
Unspent Transaction Outputs are not something people generally need to be concerned about. Each time a person sends a trade, the wallet is assumed to pack up the shrapnel in the most effective way possible. Smart usage of UTXOs is similar to utilizing the shift in your pocket to purchase a beer. Conversely, if you should split a $20 bill each time you purchased a drink in the pub, you would finish the night with pockets weighed down with a switch.
Coinbase appears to have gathered an insane number of UTXOs, which can be consequently taking its toll on the bitcoin blockchain. The further UTXOs there are, the larger the size of this trade in bytes. This was nicely explained in a bit Jameson Lopp printed on The Challenges of bettering Unspent Output Selection.
Although a bitcoin transaction can contain hundreds of inputs and hundreds of outputs, this comes at a cost. The more inputs and outputs a transaction has, the larger the data size of the transaction.
Lopp lists four reasons why it is beneficial to Boost UTXOs: preventing blockchain bloat, encouraging high trade volume, solitude, and reducing trade fees. Inefficient utilization of UTXOs contributes to fuller cubes, further afield the scaling issues which have been blighting bitcoin. Coupled with Coinbase dragging its heels Segwit, this newest revelation has generated some controversy.
There has been a discussion of these executing Segwit in 2018, but that is about as exact as they have got.
Going OTT with UTXOs
Coinbase has one wallet containing 265 BTC with 1.5 million UTXOs, and on several occasions in the past season has sent trades where the fee had been greater than the coins. One data analyst, LaurenMT, ” opines that neither Segwit nor Lightning Network would help here — the best solution, he urges, is bigger blocks. That’s the version most famously used by bitcoin cash, and as anyone who has been following the climbing debate knows, Coinbase is not large on large blocks.
To have more than a thousand Unspent Transaction Outputs related to one address — irrespective of the number of bitcoins it contains — is astounding. LaurentMT pointed out that this might signify the joint transaction fees for each one of the UTXOs would be more expensive than the worth of the coins at the wallet.
Podcaster Trace Meyer was particularly scathing of Coinbase and its own collapse to batch transactions and combine UTXOs, concluding: “Bitcoin requires less whining & more capable coding”.
Coinbase has had a difficult week, what with accusations of insider trading and the ire of dealers that lost money when Gdax shutdown because bitcoin cash struck an all-time large. It is an exchange which moves at its own pace. This cautious approach often makes Coinbase continue to the races: last to include Segwit, last to disperse bitcoin cash, and last to include altcoins.
“By being considerate blockchain engineers we could prevent the UTXO set from growing faster than is required,” wrote Jameson Lopp in 2015. Coinbase appears to have missed the memo, and this failure to clean up its electronic dust is costing the company money — while doing nothing to get the blockchain that everyone relies on.