Ephemeral Blockchain

Ephemeral blockchain is a type of blockchain in cryptography that stores data for a short time or until the data expires itself. The sole purpose of deploying this chain is to solve the data bloat problem that leads to expensive storage issues in the network.

The invention of the ephemeral blockchain occurred in the later stages of blockchain technology. After its implication, the network could easily compress data, store it on blockchain for a limited period, and delete it later on. As a result, it led to a significant reduction in the transaction fees on the blockchain.

An ephemeral blockchain is a chain of blocks that works on a different data structure compared to others. Here, it destroys the data stored on the blockchain, which cannot be accessed in the later stages. In short, they do not stay on the blockchain forever. However, when the transaction occurs, every node present in the network knows about it. As the transaction processes, the nodes store the data on a temporary basis.

The mechanism of this blockchain works on the principle of compress now and retrieve later. It utilizes components such as ephemeral timestamps and ephemeral call data (ECD). An ECD refers to data stored in a particular format, which is later removed from the database. From the formation of genesis blocks to the current state, there are various transactions and blocks added to the chain. However, at one point, the disk size may exceed its potential storage. As a result, it might cause inefficiencies in the chain. Therefore, the blockchain developers take a snapshot of the entire blockchain and also record the timestamp of this ephemeral data.

Moreover, there needs to be a more significant cost reduction for the network. On average, 5x to 10x times storage could be saved with this process. For instance, if a storage cost earlier was 68 bytes, after ECD, it reduces to 8 bytes. As a result, the transaction commitments reduce (future costs) by taking a snapshot of a new state.

This compression ensures that only relevant end-facts are stored on the chain. Likewise, the entire blockchain may be destroyed, resulting in a new ephemeral blockchain. Thus, the last snapshot or end-of-state taken acts as a genesis block for the new chain. As a result, this process continues with snapshots acting as a substantial base for future chains. However, it can be either removed automatically or on request.

Let us look at some examples of ephemeral blockchain to comprehend the concept in a better way.

Example # 1

Suppose Alice decides to send ten tokens to Bob via the Ethereum blockchain. Alice initiates the transaction from her wallet, such as MetaMask, by entering Bob's address. When she sends the transaction, the tokens leave her wallet, and the transaction is broadcast to the network. The network nodes accept the transaction request, validate it, and register the details on the blockchain by adding the transaction to a block, which is then mined and added to the blockchain. The transaction data, along with other transactions in the block, is organized using a Merkle tree. After 15,000 blocks, the blockchain's size and complexity have increased, leading to longer confirmation times and higher transaction fees.

The network could implement a hypothetical ephemeral blockchain mechanism, which involves compressing and storing only essential data while removing less critical data. In this scenario, a consensus meeting is held where all nodes agree to compress the data and store only important information, reducing disk space usage by half and making the blockchain more efficient and accessible. Implementing ephemeral call data (ECD) would allow non-essential transaction data to be removed after a certain period, reducing the overall size of the blockchain and lowering transaction fees. This approach ensures that only the most relevant information is stored, helping to maintain the blockchain's efficiency and cost-effectiveness.

Example # 2

According to the crypto updates as of July 2023, US Senator Elizabeth Warren has described Bitcoin as an ephemeral token with no value because it is not backed by anything. She believes the limitations of the banking industry could be addressed through government-backed assets like central bank digital currencies (CBDCs) rather than cryptocurrencies. Warren highlighted that CBDCs are backed by the government and could be denominated in national fiat currencies, which she sees as a solution to issues such as high transaction fees, lack of speed, and lack of transparency in the banking industry.

Since its origin, blockchains have had significant usage in the cryptography ecosystem. However, the concerns lie with the sensitive data that is reaching the cyber attackers. One such solution is ephemeral sidechains. It paves the way for the data storage to exist in a parallel chain while operating on the mainnet. Developers can deploy them to add or remove data from the parent chain without hampering the existing data sources. As a result, the workload on the parent chain is reduced. Likewise, the integrity of the platform's data is still maintained. Also, it is possible to create a secured and privacy-enabled environment in the network. 

In addition, this technology can be helpful in messaging protocols where the data stays for a limited time. Later, the messages are either deleted or disappear after a specific time. For instance, developers can install ephemeral technology in games to enable texting among the players. As a result, they will vanish later on. 

Similarly, even financial institutions and businesses can install such technology to maintain customer relationships. Through ephemeral blockchains, firms can compress financial data and access it whenever needed. So, even if hackers try to steal the data, it will stay secure in every sense.