Most of you might have heard about the new SCP protocol developed by Professor David Mazieres from Stanford. Few hardcore Bitcoin fans may find it blasphemous, but it is about time someone created an alternative protocol. Bitcoin protocol has had its own share of troubles in the past couple of years.
SCP or Stellar Consensus Protocol is being used for Stellar Digital Currency, which is an initiative of the non-profit — Stellar Development Foundation. Transactions over SCP are faster, economical and safer than on Bitcoin protocol. It is made possible by addressing the shortcomings of Bitcoin protocol. Even though some of the basic principles of SCP are similar to that of Bitcoin protocol, SCP doesn’t rely on mining to enforce trust over the network. Instead, SCP requires those running the software connecting to the network to select few more trusted participants to validate transactions by the correct application of cryptographic rules. A majority fraction of these trusted partners need to sign off on these transactions for each instance of the software to recognize it as a valid transaction. This method uses less power compared to mining.
While the Bitcoin network considers anyone with the mining infrastructure to be a trusted participant by default (which may not always be true), SCP allows people to choose whom they want to trust. Apart from Bitcoin protocol, SCP also overcomes the forking issue with the Ripple protocol, which incidentally Stellar faced few months ago, forcing them to centralize the network until a solution was found. SCP seems to be that solution Stellar was looking for to replace Ripple protocol.
Stellar protocol allows people to transfer money to any part of the world using their digital currency network. Stellar protocol supports not just Bitcoin but other altcoins and fiat currency as well. This makes Stellar a very attractive option for the huge unbanked population in developing countries. Stellar is also working on connecting microfinance institutions with SCP.
SCP is a progressive positive iteration of the digital currency protocol that addresses various shortcomings of existing protocols. As we progress in this digital currency era, we can expect further advancements in the protocol.