Cointelegraph is tracking the development of a brand new blockchain from the beginning to the mainnet through its “In the minds of blockchain developers” series. In the previous part, Andrew Levine Discussion of Koinos Group Some challenges Since identifying the key issues they intend to solve and outlining the three “crises” that hindered blockchain adoption, the team has been facing: Upgradability, Scalability, with Governance. This series focuses on consensus algorithms: the first part is about proof of work, the second part is about proof of equity, and the third part is about burning proof.
In this article, I want to use my unique perspective to help readers have a deeper understanding of a popular concept in blockchain technology, but it is also a seriously misunderstood concept: consensus algorithm.
In order to understand this part of the blockchain in depth, one of the things I always like to do in these articles is to take a step back and look at the big picture, because the consensus algorithm is only a small part of a larger system.
Blockchain is a game in which players compete to verify transactions by grouping transactions into blocks that match those created by other players. Cryptography is used to hide data that allows these people to cheat. A random process is used to distribute digital tokens to those who follow the rules and generate blocks that match those submitted by others. These blocks are then linked together to create a verifiable record of all transactions that have ever been executed on the network.
When people generate a new block containing different transactions, we call it a “fork” because the chain now forks in two different directions. This is the exact opposite of what we want to happen. The entire value of the blockchain stems from the fact that everyone agrees—a consensus has been reached—about when the transaction will occur. Therefore, the consensus algorithm aims to solve the bifurcation problem.
Satoshi Nakamoto’s true innovation
In the final analysis, the way to make sure everyone updates their database to match each other comes down to how they will be punished if they don’t. The agreement contains rules for the correct ordering of transactions, but if violation of these rules has no effect, they will be invalid.True innovation Satoshi Nakamoto Delivered in Bitcoin (Bitcoin) The white paper is his elegant use of economic incentives.
Satoshi Nakamoto did not invent the idea of ??”electronic coins”. He created an elegant system that combines cryptography and economics to use electronic coins (now called cryptocurrencies) to use incentives to solve problems that cannot be solved by algorithms alone. His design forces people to sacrifice money in order to mine transaction blocks. People will have to sacrifice the money over and over again by following the rules of the system and trying to organize transactions into blocks that everyone else in the network can accept. If they do this long enough, they will be rewarded in platform currency.
Of course, the blockchain has no way to know that money is spent in dollars, yen, or euros, which is why he uses agents in the form of meaningless work. He makes the mining of blocks unnecessarily difficult, so anyone who successfully mines a block must spend money on the hardware and the energy to run the hardware. Therefore, each successfully mined block is supported by funds sacrificed not only on the hardware but also on the energy required to run the hardware and produce the block. Whenever a fork occurs, the Proof of Work (PoW) consensus algorithm is an automated system in which the fork supported by the most work is the “correct” fork.
This means that everyone who continues to produce blocks on that fork will continue to receive rewards, and everyone who continues to produce blocks on another fork will not receive rewards. Since these people have spent money to buy hardware and run it to produce blocks, the punishment is easy because they have already been punished financially. They spent money, so if they want to continue producing blocks on the wrong chain, that’s great. They will not receive any rewards, nor will they earn their money back. They will sacrifice the money in vain.Their blocks will not be accepted by the network They will not earn any tokens.
This proof-of-work system is the only way to ensure that people who do not want to follow the rules (malicious actors) obtain and run more hardware than others combined, such as launching a 51% attack.
This is the elegance behind proof of work. Without sacrificing ever-increasing capital, the system will not function. Satoshi Nakamoto combined cryptography and economics to create a very trustworthy transaction ledger, which is trustless.
However, there are different consensus algorithms that operate in slightly different ways. The most famous of these is Proof of Stake (PoS), which I will discuss in the next article of this series. After that, I will discuss the algorithm we will use in Koinos, which is the first in general blockchain.
The views, thoughts and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Andrew Levine Is the CEO of Koinos Group, he and the former development team behind the Steem blockchain have built a blockchain-based solution that enables people to own and control their digital selves. Their basic product is Koinos, which is a high-performance blockchain based on a new framework that aims to provide developers with the functions they need to provide the user experience needed to promote blockchain applications to the public.