Plasma Cash Model
Vitalik Buterin, co-founder of Ethereum, presented a Blockchain scaling solution called Plasma Cash, an even “more scalable” version of an existing solution called Plasma, during a talk live streamed on YouTube at the Ethereum Community Conference in Paris on Friday, March 9.
Created by Buterin and Bitcoin Lightning Network co-creator Joseph Poon last year, the scaling solution is one of many under development that aims to boost the capacity of ethereum, specifically working by creating a layer of smart contracts that can interact with the main blockchain by optimizing data that is passed onto the root Blockchain, reducing the transaction fees for smart contracts and decentralized applications (DApps).
The problems with the scalability of Plasma, according to Buterin, is that every user must download and authenticate each Plasma block, which prevents exponential scaling.
To explain the Plasma Cash model, Buterin gives the example that if a user deposits some amount of ether to a crypto exchange or any third party service, a Plasma coin would be created with the same value of ether and a unique ID that cannot be merged or split.
Rather than having to download the entire Plasma history, users would be able to instead generate "Plasma coins" by sending a deposit to the contract. As such, instead of downloading and verifying everything, users could simply track the tokens they have created within that system.
"Now users only have to verify the availability and correctness of the Plasma chain only at the specific index that they want to spend, or the specific index of any coins that they own and coins that they care about."
As for the current practical applications of Plasma Cash, Buterin sees a possibility for crypto exchanges to take advantage of the technology to make themselves more “hack resistant."
Since each Plasma coin has an owner, the coins are not fully fungible or interchangeable: no one can take another user’s coin without the owner of the coin being alerted. In this case, the coin’s owner would prevent the potential fraudulent withdrawal through the “complaint system” by showing their “proof data” for their coin’s history.
Buterin notes that even if a hack occurs on an exchange using Plasma Cash, users 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."
In ending, and which we find very funny, Buterin said:
"Hopefully when the next multi-billion dollar exchange written by a totally incompetent developer gets hacked, no one will lose any money."