Is it a revolution? Or just hype? Perhaps something in between? One thing is clear, Blockchain is one of today’s big talking points. Experts see a technology that will influence our life, a new phase of the internet. But what is the belief based on?
Decentralized?
Cryptoeconomics In 30 Minutes by Vitalik Buterin (Devcon5)
Cryptography lets us prove things without assumptions about behavior.
Cryptoeconomics lets us prove things with minimal assumptions about participants.
Both are idea for decentralized / trust-minimized systems.
What’s the future of Blockchain?
Brendan from Block.one sat down with CNBC’s Brian Sullivan to discuss some of the big questions businesses are asking today. What impact is Blockchain having on enterprise? Why governments are primed for Blockchain? What can we learn from the 90’s technology bubble and more.
What is EOS? How Does it Work?
EOS is a smart contract platform much like Ethereum. EOS, however, promises the ability to perform millions of transactions per second, without any fees! How could this be possible, given the scalability of other major blockchains? In this guide, we dive into what EOS is doing differently to achieve this, and what those choices mean for the network.
Vitalik Buterin: Proof of Stake vs Proof of Work
In this brief video, Vitalik Buterin describes the difference between proof of work and proof of stake and why he considers proof of stake to be a more efficient consensus mechanism.
Proof of stake is a type of algorithm by which a blockchain network aims to achieve distributed consensus. In proof of stake, the creator of the next block is chosen via various combinations of random selection and wealth or age (i.e., the stake).
Proof-of-work uses mining; which requires solving computationally intensive puzzles to validate transactions and create new blocks. This uses a tremendous amount of energy.
Proof of stake requires much less energy consumption.
Consensus is fundamental to a blockchain. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority.
Consensus algorithms are in continual development to increase performance and efficiency.
Vitalik Buterin is a Russian-Canadian programmer and writer primarily known as a co-founder of Ethereum and as a co-founder of Bitcoin Magazine.
What is Delegated Proof of Stake?
Fundamental to different blockchain projects is the manner in which transactions are verified, or more technically speaking, how a “consensus” is achieved to ensure blockchain integrity.
Different consensus algorithms have evolved – and are still evolving – to support efficient blockchain scaling.
To better understand Delegated Proof of Stake, it’s best to grasp what it is intending to improve.
PROOF OF WORK
Proof of Work has been a fundamental consensus solution, which relies upon a network of “miners” to solve a cryptographic puzzle to form network consensus and by that receive compensation for their efforts. However, this method is energy inefficient, restricted in its potential scalability and is vulnerable to undue influence by limited entities, which is antithetical to the decentralized intention of blockchain.
PROOF OF STAKE
Proof of Stake evolved to solve the shortcomings inherent with Proof of Work. It is faster, more scaleable and consumes far less energy. It also doesn’t require special hardware, which further contributes to the intention for a democratization and decentralization of blockhain.
Instead of using miners, Proof of Stake reaches consensus by way of “validators” who stake a certain amount of their earnings to support the system in exchange for rewards. In this case, validators seek to be rewarded for their efforts as in Proof of Work, but the opportunity to achieve that compensation is more decentralized by virtue of the system randomly selecting validators for their support. However, validators can gain greater influence by way of wealth.
Hence, Proof of Stake has evolved to various flavors, and a common variant is called Delegated Proof-of-Stake.
DELEGATED PROOF OF STAKE
Delegated Proof-of-Stake builds upon the original Proof of Stake consensus mechanism and further increases speed and scalability.
Delegated proof of stake uses real-time voting combined with a social system of reputation to achieve consensus. It can be seen as the least centralized consensus protocol compared.
Daniel Larimer invented Delegated Proof of Stake to establish a consensus system that was much faster, used little energy and was more secure via greater decentralization. In this system, community participants (owners of the pertinent cryptocurrency) vote for Witnesses and Delegates to secure and validate their blockchain network.
Witnesses are those who actually do the work of validating the network and reaching consensus and the top witnesses are paid the most.
Due to the remuneration opportunity, there are many who desire to be Witnesses, as well as backup witnesses. Voting is a continuous process and each witness in the top tier is always at risk of being replaced by a user who gets more votes and is therefore considered more trusted.
Users in Delegated Proof of Stake systems also vote for a group of Delegates who oversee the governance and performance of the entire blockchain protocol, but do not play a role in transaction validation and block production.
A drawback of Delegated Proof of Stake is the potential for voter apathy, which, like a political system, could then evolve power into a more centralized system.