Solving the Scalability issue for bitcoin

I have this idea to solve the scalability problem I wish to make public.

If I am wrong I hope to be corrected, and if I am right we will all gain by it.

Currently each block is being hashed, and in its contents are the hash of the block preceding it, this goes back to the genesis block.

What if we decide, for example, we decide to combine and prune the blockchain in its entirety every 999 blocks to one block (Genesis block not included in count).

How would this work?: Once block 1000 has been created, the network would be waiting for a special "pruned block", and until this block was created and verified, block 1001 would not be accepted by any nodes.

This pruned block would prune everything from block 2 to block 1000, leaving only the genesis block. Blocks 2 through 1000, would be calculated, to create a summed up transaction of all transactions which occurred in these 999 blocks.

And its hash pointer would be the Genesis block.

This block would now be verified by the full nodes, which if accepted would then be willing to accept a new block (block 1001, not including the pruned block in the count).

The new block 1001, would use as its hash pointer the pruned block as its reference. And the count would begin again to the next 1000. The next pruned block would be created, its hash pointer will be referenced to the Genesis Block. And so on..

In this way the ledger will always be a maximum of 1000 blocks.

A bit more detail: 
 
All the outputs needed to verify early transactions will all be in the pruning block. The only information you lose are of the intermediate transactions, not the final ones the community has already accepted.

For example:

A = 2.3 BTC, B=0, C=1.4. (Block 1)

If A sends 2.3 BTC to B. (Block 2)

And then B sends 1.5 to C. (Block 3)

The pruning block will report:

B = 0.8 and C=2.9.

The rest of the information you lose, is irrelevant. No one needs to know that A even existed since it is now empty, nor do they need to know how much B and C had previously, only what they have now.

Note: The Transaction Chain would also need to be rewritten, to delete all intermediate transactions, it will show as though transactions occurred from the Genesis block directly to the pruned block, as though nothing ever existed in between.

You can keep the old blocks on your drive for 10 more blocks or so, just in case a longer block chain is found, but other than that the information it holds is useless, since it has all been agreed upon. And the pruning block holds all up to date account balances, so cheating is impossible.

Granted this pruning block can get extremely large in the future, it will not be the regular size of the other blocks. For example if every account has only 1 satoshi in it, which is the minimum, then the amount of accounts will be at its maximum. Considering a transaction is about 256bytes. That would mean the pruning block would be approximately 500PB, which is 500,000 Terra-bytes. That is a theoretical scenario, which is not likely to occur. (256bytes*23M BTC*100M (satoshis in 1 BTC))

A scenario which could be solved by creating a minimum transaction fee of 100 satoshis, which would insure that even in the most unlikely scenario, at worst the pruning block would be 5PB in size.

Also, this pruning block does not even need to be downloaded, it could be created by already existing information, each full node by itself, by

1) combining and pruning all previous blocks

2) using the genesis block as its hash pointer

3) using a predefined random number "2", which will be used by all. A random number which is normally added to a block to ensure the block's hashrate difficulty, is not needed in this case, since all information can be verified by each node by itself through pruning.

4) Any other information which is needed for the SHA256 hash, for example a timestamp could be copied off the last block in the block chain.

These steps will ensure each full node, will get the exact hash code as the others have gotten for this pruning block.

And as I previously stated the next block will use this hash code as its hash reference.

By creating a system like this, the pruning block does not have to be created last minute, but gradually over time, every time a new block comes in, and only when the last block arrives (block 1000), will it be finalized, and hashed.

And since this block will always be second, it should go by the name "Exodus Block".
 
Adam Shem-Tov