Video: What Is Utreexo And What Could It Mean For Bitcoin?

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On this episode of The Van Wirdum Sjorsnado, Aaron and Sjors are once again joined by Ruben Somsen. But this time, the trio isn’t discussing one of Somsen’s own proposals but diving into a concept from research scientist and Lightning Network creator Tadge Dryja called “Utreexo.”

Whenever a new Bitcoin transaction is made, Bitcoin nodes use a UTXO set (the overview of all bitcoin in existence at any given time) to determine that the coins that are being spent really exist. This UTXO set is currently several gigabytes in size and continues to grow over time and there is no upper limit to how big it can potentially get.

Because Bitcoin nodes perform best and fastest if the UTXO set is kept in RAM (in particular when syncing a new node), and RAM is usually a relatively scarce resource for most computers, it would benefits a node’s performance if the UTXO set could be stored in a more compact format. This is the promise of Utreexo.

Utreexo would take all the UTXOs in existence and include them in a Merkle Tree, a data-structure consisting only of hashes. Aaron, Sjors and Ruben explain how the compact Utreexo structure could suffice in proving that a particular UTXO is included when a new transaction is made, and they discuss the potential benefits that could surface if this solution becomes available, as well as some of its potential tradeoffs.

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