Fundamental Flaws In The Bitcoin Proof Of Work Need To Be Addressed Soon

A consensus mechanism is developed for the primary purpose of proofing something. The idea is to make sure that all the network nodes are in consensus and valid on the blockchain. When the consensus mechanism does its job well, there will be no malicious attacks on the blockchain network. When it comes to blockchain technology, the public is incharge of verifying and stamping transactions. After the data is validated, it will be added to the block permanently. All the blocks are linked to each other hence the name blockchain. For consensus to occur, each node must have an identical record of the transaction.

The Consensus Problem

In a perfect world, the blockchain will be immune to malicious attacks. But the world is not perfect so these consensus algorithm face a challenge when trying to guarantee the safety and liveness of the data. Developers have still not figured out how they can make the system work flawlessly.

Bitcoin, for example, relies on the proof-of-work algorithm. While this algorithm has its benefits, it also has some serious disadvantages that can ruin the Bitcoin network. The drawbacks of the proof-of-work algorithm was what gave the proof-of-stake algorithm an opportunity to grow. Unfortunately, even the proof-of-stake algorithm is not without its faults.

The challenges are deeply structural. So, many new blockchain-related businesses are looking for alternative consensus mechanisms. Developers all over the industry have come up with different consensus mechanism that they hope will be more efficient than the big two. Sosimilarme of these mechanisms include:

1. Proof of Authority

This mechanism is like proof-of-stake because the identity of the user is what forms the stake. The validator will be verified and identified personally before they can be marked as trusted nodes. Any user who confirms their identity will have the power to validate blocks.

2. Markov Chain Monte Carlo (MCMC)

This mechanism functions on a Directed Acyclic Graph architecture called Tangle. This is one of IOTA’s greatest achievements and it is easy to apply. Users broadcast transactions so the algorithm can randomly pick out two transactions that haven’t been confirmed to verify. This system still requires a little proof-of-work but the broadcasts by a particulate user can be verified by another user.

3. Proof of Contribution

This mechanism doesn’t depend on mining. The algorithm achieves consensus simply by measuring all the useful contributions users make to support the functions of the network. The mechanism is based on storage space but users can donate work that can be applied on the network. The rewards are usually in cryptocurrency tokens.

4. Byzantine Agreement

This algorithm is what runs Stellar and Ripple and for good reason. It allows quick and cheap consensus without tying participation to asset ownership. The drawback to using this consensus mechanism is that it requires a degree of centralization to work.

The bottom line is that the blockchain industry is still new and a lot about it hasn’t been figured out yet. One of the major challenges is getting a consensus mechanism that works well but doesn’t dilute the concept of decentralization.


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