Giving cryptocurrency users more bang for their buck

A new cryptocurrency-routing scheme co-invented by MIT researchers can boost the efficiency — and, ultimately, profits — of certain networks designed to speed up notoriously slow blockchain transactions.  

Cryptocurrencies hold promise for peer-to-peer financial transactions, potentially making banks and credit cards obsolete. But there’s a scalability issue: Bitcoin, for instance, processes only a handful of transactions per second, while major credit cards process hundreds or thousands. That’s because the blockchain — the digital ledger cryptocurrencies are built on — takes a really long time to process transactions. 

A new solution is “payment channel networks” (PCNs), where transactions are completed with minimal involvement from the blockchain. Pairs of PCN users form off-blockchain escrow accounts with a dedicated amount of money, forming a large, interconnected network of joint accounts. Users route payments through these  accounts, only pinging the…