MasterCard was granted a patent on October 9th for a new method of partitioning blockchains to allow multiple transactions simultaneously.
The patent also noted the cost efficiency of partitioned blockchains — the standard protocol of dividing transactions across ledgers wastes electricity.
Different blockchains organise their transactions into different blocks. Bitcoin uses one kind of system to record data on its blockchain while Ethereum finds another way.
But what if a company wants to store different types of data on their blockchain? At the moment, they would need to set up a variety of blockchains.
In their patent filing, MasterCard describes how records on standard blockchains “are often required to be of the same format and include the same types, and sometimes even sizes, of data.”
For every different size of data, say 1 gigabyte as opposed to 3 terabytes, a new blockchain would be required. This is wasteful and costly, and what makes MasterCard’s patent for partitioned blockchains so brilliant.
What is a Partitioned Blockchain?
Bitcoin Australia spoke with Anouk Pinchetti, education consultant at the Melbourne-based Blockchain Centre to learn more.
“A partitioned blockchain is like running multiple chains side-by-side so they can process transactions in parallel to speed up transaction throughput,” Mr. Pinchetti explained.
This increases the number of transactions completed while decreasing the amount of resources used per transaction. But if it’s such a good idea, why weren’t partitioned blockchains a think before now?
According to Mr. Pinchetti, with great rewards comes great risk.
“Partitioning or sharding a blockchain can be faster, but creates challenges when transactions cross shards. You risk locking both chains until the cross-partition transaction completes, losing any performance benefit.”
So while partitioned blockchains aren’t a new idea, MasterCard’s method of maximising their use is.
MasterCard’s Master Plan
The credit card company sees the potential of using partitioned blockchains to complete transactions in multiple currencies at once. But for now at least, cryptocurrencies won’t be eligible.
While MasterCard is adopting the system underlying Bitcoin, the company’s executives are vehemently against the cryptocurrency calling it “junk” and “a venomous snake”.
Their opinions on cryptocurrencies may be revealing of how MasterCard intends to use the technology.
“Given MasterCard’s public anti-Bitcoin stance,” said Mr. Pinchetti, “one would expect their implementation to preserve their own competitive advantage over the privacy and security of their customers.”
Partitioning alters the transparent and secure qualities blockchain is well-known for – good news for credit card companies, not great news for privacy-minded users.
The Root of the Issue
In a standard blockchain, it is possible for anyone to verify a transaction by tracing it back up the Merkle tree. But splitting up blockchains may make this verification process more difficult. Will these changes mean that MasterCard’s partitioned blockchain won’t be as secure as before?
Yes, and no. According to the Blockchain Centre’s education consultant,“so long as a transaction chain occurs entirely on a single partition, there should be no difference.”
So, what if a transaction takes place across several or many partitions?
“With cross-partition transactions involved, there will be additional coding challenges to be solved, but that’s an order of magnitude less demanding than the benefits an individual private organisation will gain by opting for a centralised private chain.”
At the end of the day, MasterCard’s patent may revolutionise mainstream payment options in the future. Before then major testing will be required to understand the limits and weaknesses of this new transaction method.