Blockstream co-founder Adam Back stated that in 2014, before Ethereum had written any code, he advised them to use unspent transaction outputs instead of a balance-based, stateful model with active code. He also mentioned that Vitalik Buterin's statement this year equates to an acknowledgment that Bitcoin's path is correct, although he did not cite his advice from back then. Proof of work was also included in his remarks, which he claimed was similarly suggested to them.

This statement arose in the context of discussions on address reuse. The discussion in the same thread suggested that Ethereum was built on address reuse, where static addresses retain complete transaction history, and named addresses could expose the identity of holders. Back previously summarized this architecture as repeated use of addresses combined with self-exposure. The post did not include the original letter or meeting records from 2014.

In a public post on August 16, Vitalik Buterin credited Bitcoin developers, specifically mentioning Utreexo, and stated that Ethereum's current scaling strategy is a realization of these ideas. He wrote that the goal is not to dismantle accounts but to simultaneously retain unspent transaction output state and dynamic state, allowing most activities to scale significantly without sacrificing decentralization, node operability, and censorship resistance.

A research proposal in July incorporated native unspent transaction outputs into Ethereum. Once outputs are spent, the protocol primarily records that the output has been consumed, and transactions from output to output do not need to change account states. Complex decentralized finance contracts can still use dynamic storage. Secondary reports indicated that permanent payment states could reduce by 99.8%, compressing one billion records to about 300MB. Ethereum's active state continues to grow at approximately 100GB per year. Buterin also wrote in February that the execution layer is expected to scale by about 1000 times with zero-knowledge virtual machines, while the data layer could scale by about 500 times with PeerDAS and blobs, with state being another hurdle.

Back's position brings this debate back to the company level. He is the proposer of hashcash and also the co-founder and CEO of Blockstream. Blockstream sells infrastructure and sidechains related to Bitcoin, not Ethereum's account model. He tied unspent transaction outputs and early proof of work together, equating this year's research shift to a delayed confirmation of his 2014 advice.

The buyers are Ethereum researchers aiming to reduce node burdens and applications still accumulating state. The sellers are existing call paths that charge based on balance and contract storage. The driving force behind the event is the annual expansion of state by about 100GB, not a rewritten protocol. If funding and development time shift towards native outputs, the beneficiaries will be payment-type states and Bitcoin-side model narratives. Those under pressure are applications relying on permanent account balances, authorization records, and contract storage, as well as wallets designed around address reuse.

Source: Public Information