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Ethereum Consensus Protocol

Proof Of Work Vs Proof Of Stake: Basic Mining Guide

Proof Of Work Vs Proof Of Stake: Basic Mining Guide

Proof of Work vs Proof of Stake: Basic Mining Guide Angel Investors, Startups & Blockchain developers... Recently you might have heard about the idea to move from an Ethereum consensus based on the Proof of Work (PoW) system to one based on the so-called Proof of Stake. In this article, I will explain to you the main differences between Proof of Work vs Proof of Stake and I will provide you a definition of mining, or the process new digital currencies are released through the network. Also, what will change regarding mining techniques if the Ethereum community decides to do the transition from work to stake? This article wants to be a basic guide to understanding the problem above. First of all, lets start with basic definitions. Proof of work is a protocol that has the main goal of deterring cyber-attacks such as a distributed denial-of-service attack (DDoS) which has the purpose of exhausting the resources of a computer system by sending multiple fake requests. The Proof of work concept existed even before bitcoin , but Satoshi Nakamoto applied this technique to his/her we still dont know who Nakamoto really is digital currency revolutionizing the way traditional transactions are set. In fact, PoW idea was originally published by Cynthia Dwork and Moni Naor back in 1993, but the term proof of work was coined by Markus Jakobsson and Ari Juels in a document published in 1999. But, returning to date, Proof of work is maybe the biggest idea behind the Nakamotos Bitcoin white paper published back in 2008 because it allows trustless and distributed consensus. Whats trustless and distributed consensus? A trustless and distributed consensus system means that if you want to send and/or receive money from someone you dont need to trust in third-party services. When you use tra Continue reading >>

A (short) Guide To Blockchain Consensus Protocols - Coindesk

A (short) Guide To Blockchain Consensus Protocols - Coindesk

A (Short) Guide to Blockchain Consensus Protocols We hear plenty of talk of how public blockchains are going to change the world, but to function on a global scale, a shared public ledger needs a functional, efficient and secure consensus algorithm. A consensus algorithm, like bitcoin's proof of work (the one we hear about most often), does two things: it ensures that the next block in a blockchain is the one and only version of the truth, and it keeps powerful adversaries from derailing the system and successfully forking the chain. In proof of work, miners compete to add the next block (a set of transactions) in the chain by racing to solve a extremely difficult cryptographic puzzle. The first to solve the puzzle, wins the lottery. As a reward for his or her efforts, the miner receives 12.5 newly minted bitcoins and a small transaction fee. Yet, although a masterpiece in its own right, bitcoin's proof of work isn't quite perfect. Common criticisms include that it requires enormous amounts of computational energy , that it does not scale well (transaction confirmation takes about 10-60 minutes) and that the majority of mining is centralized in areas of the world where electricity is cheap. Bitcoin creator Satoshi Nakamoto woke us up to the potential of the blockchain, but that doesn't mean we can't keep searching for faster, less centralized and more energy-efficient consensus algorithms to carry us into the future. While not a comprehensive list, the following are a few of the alternative approaches being kicked around out there. The most common alternative to proof of work is proof of stake. In this type of consensus algorithm, instead of investing in expensive computer equipment in a race to mine blocks, a 'validator' invests in the coins of the system. Note the te Continue reading >>

White Paper Ethereum/wiki Wiki Github

White Paper Ethereum/wiki Wiki Github

Introduction to Bitcoin and Existing Concepts The concept of decentralized digital currency, as well as alternative applications like property registries, has been around for decades. The anonymous e-cash protocols of the 1980s and the 1990s were mostly reliant on a cryptographic primitive known as Chaumian Blinding. [8] Chaumian Blinding provided these new currencies with high degrees of privacy, but their underlying protocols largely failed to gain traction because of their reliance on a centralized intermediary. In 1998, Wei Dai's b-money [9] became the first proposal to introduce the idea of creating money through solving computational puzzles as well as decentralized consensus, but the proposal was scant on details as to how decentralized consensus could actually be implemented. In 2005, Hal Finney introduced a concept of reusable proofs of work, [10] a system which uses ideas from b-money together with Adam Back's computationally difficult Hashcash [11] puzzles to create a concept for a cryptocurrency, but once again fell short of the ideal by relying on trusted computing as a backend. In 2009, a decentralized currency was for the first time implemented in practice by Satoshi Nakamoto, [1c] [1d] combining established primitives for managing ownership through public key cryptography with a consensus algorithm for keeping track of who owns coins, known as "proof of work." The mechanism behind proof of work was a breakthrough because it simultaneously solved two problems. First, it provided a simple and moderately effective consensus algorithm, allowing nodes in the network to collectively agree on a set of updates to the state of the Bitcoin ledger. Second, it provided a mechanism for allowing free entry into the consensus process, solving the political problem of Continue reading >>

Beginner's Guide To Ethereum Casper Hardfork: What You Need To Know

Beginner's Guide To Ethereum Casper Hardfork: What You Need To Know

The Casper updates mission is straightforward, then: to shift ether from being a PoW coin to a Proof-of-Stake (PoS) coin . As opposed to the PoW consensus protocol, the PoS protocol achieves consensus through stakerssometimes referred to as minters, toowho stake their coins by locking them down in specialized wallets . With these stakers at work, mining will become redundant, meaning the Ethereum network post-Casper will rely on stakers and staking pools instead of miners for its operability. And, like miners, stakers will be rewarded for their service to the network. Minters will receive an annual dividend of ether (collected from network fees), so staking would be a lucrative endeavor for those with enough coins. Naturally, then, the more ETH you stake, the larger your annual dividends will be. For now, Ethereums developers havent arrived at a hard number for the amount of ETH that will be required to stake. What they have confirmed, though, is that the number will likely start out higher before gradually being brought considerably lower. For instance, Ethereum founder Vitalik Buterin has recently thrown around a guesstimate of needing approximately 1,000 ETH to be one of the networks inaugural stakers. He said that number could be dropped down to as low as 10 ETH over time. Whatever the number ends up being, users will still be able to band together and create staking pools, just like there are robust mining pools in the Bitcoin and Ethereum communities today. Youll simply pitch your desired amount of ether in, lock in down with your peers, and rake in the dividends together (to be shared proportionally, of course). Well, the Casper update is certainly a team effort, but its inarguable that top Ethereum researcher Vlad Zamfir has been at the vanguard of the updates Continue reading >>

Proof Of Stake Faq Ethereum/wiki Wiki Github

Proof Of Stake Faq Ethereum/wiki Wiki Github

See A Proof of Stake Design Philosophy for a more long-form argument. No need to consume large quantities of electricity in order to secure a blockchain (eg. it's estimated that both Bitcoin and Ethereum burn over $1 million worth of electricity and hardware costs per day as part of their consensus mechanism). Because of the lack of high electricity consumption, there is not as much need to issue as many new coins in order to motivate participants to keep participating in the network. It may theoretically even be possible to have negative net issuance, where a portion of transaction fees is "burned" and so the supply goes down over time. Proof of stake opens the door to a wider array of techniques that use game-theoretic mechanism design in order to better discourage centralized cartels from forming and, if they do form, from acting in ways that are harmful to the network (eg. like selfish mining in proof of work). Reduced centralization risks, as economies of scale are much less of an issue. $10 million of coins will get you exactly 10 times higher returns than $1 million of coins, without any additional disproportionate gains because at the higher level you can afford better mass-production equipment. Ability to use economic penalties to make various forms of 51% attacks vastly more expensive to carry out than proof of work - to paraphrase Vlad Zamfir, "it's as though your ASIC farm burned down if you participated in a 51% attack". How does proof of stake fit into traditional Byzantine fault tolerance research? There are several fundamental results from Byzantine fault tolerance research that apply to all consensus algorithms, including traditional consensus algorithms like PBFT but also any proof of stake algorithm and, with the appropriate mathematical modeling, pr Continue reading >>

Casper Consensus Algorithm

Casper Consensus Algorithm

Nodes that take on the validation role have the function to achieve consensus on the blockchain state. Validators also assure a blockchain is self-consistent and hasnt been tampered with and protect against Sybil attack. The Casper consensus protocol includes stake-based bonding, unbonding, and betting cycles that result in consensus. The purpose of a decentralized consensus protocol is to assure consistency of blockchains or partial blockchains (based on namespaces), across multiple nodes. To achieve this any consensus protocol should produce an outcome that is a proof of the safety and termination properties of class of consensus protocols, under a wide class of fault and network conditions. RChains consensus protocol uses stake-based betting, similar to Ethereums Casper design. This is called a proof-of-stake protocol by the broader blockchain community, but that label leads to some misperceptions including overstated centralization risks. Validators are bonded with a stake, which is a security deposit placed in an escrow-like contract. Unlike Ethereums betting on a whole blocks, RChains betting is on logical propositions. A proposition is a set of statements about the blockchain, for example: which transactions (i.e. proposed state transitions) must be included, in which order, which transactions should not be included, or other properties. A concrete example of a proposition is: transaction t should occur before transaction s and transaction r should not be included. For more information, see the draft specification Logic for Betting on Propositions (v0.7) . At certain rendezvous points validators compute a maximally consistent subset of propositions. In some cases, this can be computationally hard and take a long time. Because of this a time-out will exist, which Continue reading >>

Introducing The Foamprotocol

Introducing The Foamprotocol

As technology evolves and changes, maps need to change too. We are excited to introduce the FOAM Protocol as the interoperable standard for location on Ethereum. FOAM is an open protocol for decentralized, geospatial data markets. Our mission is to build a consensus-driven map of the world that can be trusted for every application. This post offers a brief introduction to our vision for secure and decentralized geospatial data. Over the coming weeks, we will share deeper dives into the FOAM Protocol and how it will be realized. Maps and addressing systems are at the foundation of our lives, and have played a major role throughout history. We have gone from hand drawn maps and non-standardized measurement tools like footsteps, to high-tech developments in digital cartography that use satellite imaging and geographic information systems. Whoever controls the map defines how we navigate the world. Currently, Google dominates consumer mapping, followed by HERE, a company jointly owned by the largest German automotive companies, and TomTom, known for standalone GPS units, lagging behind. And thats a problem. Even more so for applications that require consensus-driven and verifiable geospatial data.* (*Footnote: Geospatial data is information about a physical object that can be represented by numerical values in a geographic coordinate system.) OpenStreetMap (OSM) is the alternative to Google and other proprietary mapping data, as an open source and collaborative mapping project which is free to use and created by millions of participants around the world. OSM is gaining traction on Google , and it is currently used by Mapbox, Apple Maps, PokemonGO, Foursquare, and Craigslist. As the crowdsourced and open map gets better and better, the value of licensing proprietary mapping Continue reading >>

Consensus Compare: Casper Vs. Tendermint

Consensus Compare: Casper Vs. Tendermint

The Byzantine Generals Problem was first proposed by SIFT in the 1970s to tolerate real-time faults in commercial aircraft and then given the name by Lamport, Shostak, and Pease in 1982. It described the problem of achieving distributed agreement over a compromised communications network of making a reliable system from unreliable parts, as Ethan Buchman of Cosmos puts it. From 1982 to 1999, no one had invented a system that solved the Byzantine Generals Problem. It was irrelevant to computing for a long time because, at the time, the internet had evolved out of cloud-based central computing; all that was needed was fault-tolerance. So, crash-fault tolerant algorithms like Paxos, invented in the late 1980s , and Raft, invented in 2013, were widely deployed. Practical Byzantine Fault Tolerance (PBFT) was created in 1999, but was not really adopted by anyone outside of academia. The breakthrough that Satoshi Nakamoto made in 2008 was in bringing internet-scale distributed Byzantine Fault Tolerant (BFT)consensus into a blockchain scheme. Once that demonstration happened, a lot of the people from the systems research community started to formulate ideas around applying what was largely an academic curiosity to a real-world application. In 2011, a thread in the BitcoinTalk forum formed discussions around the idea of something called Proof-of-Stake. First-generation PoS protocols such as Peercoin were naively implemented but were steps in the right direction. The first person who really started talking about applying BFT research in a PoS public blockchain context was Jae Kwon, who, in 2014, invented Tendermint. At the time, PoS research made a large assumption that the set of peers in the system is static and that it would be stable over long periods of time. It was complet Continue reading >>

Consensus - What Proof Of Work Function Does Ethereum Use? - Ethereum Stack Exchange

Consensus - What Proof Of Work Function Does Ethereum Use? - Ethereum Stack Exchange

What proof of work function does Ethereum use? The Ethereum frontier network currently uses a proof of work (PoW) based consensus algorithm. But which specific PoW function does that algorithm use, and why was it chosen? The PoW algorithm used in Frontier and Homestead is called Ethash , and it was created specifically for Ethereum. The primary reason for constructing a new proof of work function instead of using an existing one was to attack the problem of mining centralisation , where a small group of hardware companies or mining operations acquire a disproportionately large amount of power to impact or manipulate the network (should they so choose). The economic forces within existing networks (such as Bitcoin and Litecoin) make centralisation of mining efforts highly profitable, in part due to the possibility for producing ASICs , specialised chips specifically designed to outperform standardised computer hardware by many orders of magnitude in hashing performance. Other factors that promote mining centralisation, such as handling of orphaned blocks, are tackled separately within the Ethereum protocol. By specifically designing an "ASIC-resistant" PoW algorithm, the Ethereum team hopes to reduce economic incentives for mining centralisation in Ethereum, at least until a secure PoS algorithm can be designed and deployed . The way that Ethash aims to provide a PoW algorithm for which commodity hardware is already highly optimised (and hence creation of an ASIC, which is expensive, will yield very little advantage over simply using the latest commodity hardware) is by emphasising a property called memory hardness . Memory hardness essentially means that your performance is limited by how fast your computer can move data around in memory rather than by how fast it can Continue reading >>

Ethereum Founder Vitalik Buterin Discusses Initial Coin Offerings, The Consensus Algorithm, And The Most Interesting Apps Quartz

Ethereum Founder Vitalik Buterin Discusses Initial Coin Offerings, The Consensus Algorithm, And The Most Interesting Apps Quartz

This interview is an extended version of a piece featured in Quartzs new book The Objects that Power the Global Economy . You may not have seen these objects before, but theyve already changed the way you live. Each chapter examines an object that is driving radical change in the global economy. This is from the chapter on Satoshis paper, which explores the decentralization of power. In January, I interviewed ethereums inventor, Vitalik Buterin, when ether was trading at $10 and before initial coin offerings were a thing. Two months after we spoke, ether began a historic run-up to nearly $400; while ICOs have raised well over $1 billion this year using crypto-tokens built on the ethereum blockchainan amount that even Buterin surely couldnt have foreseen. Buterin discusses funding the internet with tokens, ethereums planned switch to a new type of consensus algorithm, and what he does during an emergency like 2016s DAO hack , which saw tens of millions stolen in hours, with millions clawed back within days by ethereum developers. Quartz: What do you think of this notion of fat protocols , that blockchains for the first time allow developers working on them to capture value? Buterin: A lot of different base-layer protocols that we rely on in the internet, in peer-to-peer networks, in various kinds of communications, these protocols have provided huge amounts of value. But there has always been this public goods problem in trying to actually fund the ongoing development and maintenance of these protocols. One of the worst examples of this was the Heartbleed bug back in 2014, when basically a huge number of websites ended up getting hacked. When they dug down as to why it happened, it was because there was a bug in one of the OpenSSL libraries, a library thats used by huge Continue reading >>

Introduction To Ethereums Casper Proof-of-stake

Introduction To Ethereums Casper Proof-of-stake

With Ethereums DevCon 3 starting today in Cancun, Mexico, developers from around the world will be asking questions about the future of Ethereums blockchain. One upgrade that will be under the spotlight is the much-anticipated switch from the current Proof of Work consensus algorithm to Proof of Stake (PoS). In development since 2013, the Casper PoS solution by founder Vitalik Buterin and Ethereum developer Vlad Zamfir is almost complete and can see a potential release, as early as the second part of the Metropolis HF , Constantinople. Traditional Proof of Stake (PoS) is a consensus algorithm that allows wealthy participants of a network to validate blocks by staking or locking up their coins. In a Proof-of-Work (PoW) consensus system, the algorithm rewards miners (Block Reward) who solve complex cryptographic puzzles which create new blocks and validate transactions. In a Proof-of-Stake consensus system, the creator of a new block is chosen depending on the amount of coins they have locked up (Stake) and there are no block rewards in this system. Instead, Validators earn the transaction fees. But what happens if the wealthiest validators try to cheat or reverse transactions? Enter Vitaliks Casper PoS solution. The key difference between traditional proof-of-stake consensus systems and the Casper PoS is that validators can be punished for not following the rules and trying to validate malicious blocks. Think of it as a bet. If your stake is 1000 ETH, then youre essentially betting 1000 ETH that the next block to be included, is valid. However, if it is a bad transaction/block then you will lose your stake and be removed from the validators pool. According to Vitalik, anyone can join as a validator, as long as they have enough ETH to deposit/stake into the Casper Smart Continue reading >>

Ethereum Proof Of Stake Implementation Launched By Applicature

Ethereum Proof Of Stake Implementation Launched By Applicature

Ethereum Proof of Stake Implementation Launched by Applicature Home > Company News >Ethereum Proof of Stake Implementation Launched by Applicature January 22nd, 2018, San Francisco, California. Applicature has launched the Proof of Stake Consensus Protocol on Ethereum in order to secure and stabilize transactions in multiple industries like banking, supply chain, and marketing, including loyalty systems. Proof of Stakewas developed during the fall-winter period of 2017-2018, and is ready to roll out for testing. Due to high demand from clients and preexisting PoW that wasnt always suitable for use in certain tasks, Applicature has made the decision to develop its own AEPoS (Applicature Ethereum Proof of Stake Consensus Protocol). Applicature: a Blockchain Development Agency Applicature is a boutique blockchain agency with a presence in the U.S. and Europe. Applicature works on projects implementing the development of smart contracts: the research, deployment, and customization of blockchain solutions; a technical advisory for blockchain resources; and a technical consultancy for token sales and initial coin offerings. Proof of Stake is a blockchain consensus and reward algorithm that distributes rewards to declared economic interests in the gamefor example, through the holding of digital assets. Declared interest, in this case, is known as stake. Proof of Work is all about mining. To get a reward, you have to solve a hard block algorithm (puzzle). The process of solving the block is called mining. All blocks must be verified by mining. This means that in order to validate transactions, miners must use a great deal of computational power to solve a puzzle. The amount of reward you get depends upon how fast you calculate, so to solve puzzles faster, miners have to invest Continue reading >>

Ethereum: Permission, Access, And Consensus? Better Thanbitcoin?

Ethereum: Permission, Access, And Consensus? Better Thanbitcoin?

enjoys learning about blockchain technology. Ethereum: Permission, Access, and Consensus? Better thanBitcoin? Due to several challenges in the Bitcoin blockchain protocol related to the limited capabilities of its scripting language, second generation blockchain ledgers such as Ethereum implement their own version of a decentralized ledger. The Ethereum blockchain has an underlying goal similar to the Bitcoin blockchains, which is to facilitate transactions between consenting individuals who would otherwise have no means to trust each other Wood 2016 It does so by establishing a transaction-based state-machine in which participants can expect that agreements between them will be enforced autonomously. In order to do so, Ethereum provides a quasi-Turing-complete virtual state machine, the Ethereum Virtual Machine (EVM). It allows developers to deploy complex smart contracts that are compiled in this machine and autonomously enforce agreements when the programmed conditions are met. This possibility is one of the fundamental differences to the Bitcoin blockchain. In the following posts, the blockchain characteristics defined in the post Bitcoin, Ethereum, and Hyperledger Fabric Which one wins? will be assessed for the Ethereum blockchain. To remain digestible, the first three of the eight characteristics will be explained here, namely: Permission, Access, and Consensus. With respect to permissioning, Ethereum is a public, permissionless blockchain. This means, everyone can download an Ethereum client, view the transaction data and participate in transaction validation (mining). Permissioning is however possible on higher development layers, namely on the application layer. Some groups, mostly industry consortia, have adapted Ethereums open-source protocol to run their ow Continue reading >>

Casper Protocol For Ethereum: Will It Change The Market Forever?

Casper Protocol For Ethereum: Will It Change The Market Forever?

If you follow cryptocurrency news and events, then it is expected that you have heard of Ethereum Casper and the shift to a Proof-of-Stake consensus algorithm. What is Casper? is one of the foremost questions many people ask when they hear of Casper. Well, in this article, you will get to know what it is and how it could be useful for ethereum . Casper, in simple terms, is an economic consensus protocol that is based on the principle of security deposits. What this means is that nodes, commonly known as bonded validators will have to place/stake a security deposit (ether deposited in bound wallet) to be able to participate in the blockchain consensus by securing and verifying blocks. Who came up with the Casper Proof-of-Stake idea? Well, the Casper protocol has had a team of developers who have been working to fine tune it. However, it is Vlad Zamfir who is credited with originating the idea of Casper. He is often regarded as the Face of Casper. Apart from the lead researchers Vlad and Vitalik, other team members include developer Rick Dudley, Peter Szilagyi, Jon Choi and computer science student Loi Luu. The Casper protocol is particularly significant because it has the direct control of the nodes security deposits and therefore primarily affects incentives of the bonded validators. Casper has been designed to provide users with a sort of fairness when it comes to validating blocks using the Proof-of-Work consensus mechanism. Ethereums shift from Proof-work consensus to the Proof-of-Stake consensus mechanism was a subject of debate right from the beginning. However, traditional PoS systems had a shortcoming in relation to what happened if a validators or validators misbehaved and intentionally produced invalid blocks. This situation is referred to as the Nothing at St Continue reading >>

Ethereum - Consensys

Ethereum - Consensys

Ethereum is how the Internet was supposed to work. There are four core technological building blocks that are coordinated to enable the Ethereum decentralized application platform to operate: 1) Cryptographic Tokens and Addresses: a mathematically secure unique voucher system that can act as numeraire and be used pay for goods, services or assets, and can also be used to represent a mathematically secure, pseudonymous identity; 2) Peer-to-peer Networking: individual users connect their computers together forming a network to exchange data without a central server (both Bitcoin and Ethereum run on P2P networks); 3) Consensus Formation Algorithm: this algorithm permits users of the blockchain to reach consensus about the current state of the blockchain (the Bitcoin blockchain reaches consesus on a global state change every 10 minutes on average whereas the Ethereum blockchain reaches consensus approximately every 15 seconds). 4) Turing Complete Virtual Machine: a virtual machine is a computer that exists as software, and can be run at a layer of abstraction above the underlying hardware; Turing complete means that this software computer can run any computer program one defines and is powerful enough to implement any program defined in any similarly computationally complete system (as opposed to Bitcoin, which has a virtual machine but can only run a much simpler class of programs); These 4 pillars of decentralized application technology are designed to enable smart contracts. Smart contracts are computer protocols that facilitate, verify, or enforce the negotiation or performance of some sort of agreement (e.g. a legal contract emulating the logic of contractual clauses or a financial contract specifying responsibilities of the counterparts and automated flows of value). Continue reading >>

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