Consensus Protocol – Proof Of Work

Preface

As previous Blockchain foundations post , a consensus protocol is mandatory to operate a blockchain network.

The protocol is a key properties to determine the network specifications as the images below:

 

• Security/Consistency vertex represent for ability to prevent from attacking such as double-spending or blockchain manipulation
• Decentralization vertex represents for how power in blockchain is allocated to all the participants
• Scalability vertex represents the ability to handle transaction , usually measure by Transaction Per Seconds (TPS)

There is a solid mathematical proof that there is no consensus protocol could achieve 3 vertexes. On the other hand, a consensus protocol could maximize 2 over 3 vertexes. 

At least , this proof could be wrong if the quantum technology reach a mature milestone and there is no limit in resource and physics could block the blockchain.

What is the consensus protocol ?

The consensus protocol , in a word , it is a rule for all of the participants ( also called node ) to follow in order to add a block (data) to the blockchain.

The power or blockchain government ability is define in the rule. In the example below, each node holds a copy of ledger (full blockchain data) . In order to add new data to this ledger, all the node must agree on this modificaiton.

 

1. sender : send 1 USD from A -> B
2. A node receives the request -> validate signature (based on predefined cryptography)->  follow the rule to add this data to the ledger -> generate proof
3. Broadcast the new update data to other nodes with a proof
4. Other nodes receive the broadcast message contains proof -> validate the proof correctness -> add the new data to its ledger
5. The whole network has sync the ledger data
6. Receiver query the balance of B from any node -> get the balance of B

The consensus protocol has to define what is the transaction’s proof in order for adding it into the ledgers on every nodes .

Let’s dive deeper in the way Proof Of Work(PoW) define the proof.

Proof Of Work

As the name of this consensus protocol, it needs a proof proving that the node has been finish a lot of work.

The rule to generate the proof based on guessing number game , the node need to guess a number until it satisfy the condition of the network. The steps of the game are :

( the hash algorithm could be demonstrated in  https://passwordsgenerator.net/sha256-hash-generator/ )

1. Receive request from user with data: A send to B 1 USD
2. Find a random number call Nonce, that satisfied the SHA256(“Previous block hash + A send to B 1 USD + Nonce”) having first-4-character all 0
   1. for example: 
   2. SHA256(“Previous block hash A send to B 1 USD + 1“) C2575AB80D094F47FA57367F1B60CED33C6A40F1574BDD61756F32CA5323D8AD
   3. SHA256(“Previous block hash A send to B 1 USD + 2“) -> EE65B28B7FADFFEDBF8B2C556F11D66AA02ABB2992CD304C89F89FE53388019B
3. As the above example, it demonstrate the difficult to generate a block with proof , the probability to find a Nonce to have   first-4-character all 0 is about 36^64 / 36^68 = 1 / 36^4 = 1 / 1679616 
4. With the probability 1 / 1679616  , the node takes time and effort try to guess the Nonce as soon as possible before other node ( if the Nonce is finding after another node, the whole process must be repeat , due to the “Previous block hash” is updated.
5. In the practice , the difficult level is much more than first-4-character , it could be 20 or more. The higher the difficult level, the more guesses need to be done by the node.

Known Issues

• This guessing number proof does consume a lot of energy wastefully
• 51% attack is possible to break this proof , it depend mostly on the total hashing power of all the nodes in the network
  • it could add a malformed data to the blockchain if 51% hashing power is belong to someone 
• The guessing processing always cost a fixed amount of time , thus , TPS have a upper-limit is about 5-30 transaction per second.
• Application Specific Integrated Circuits ( ASIC ) is a one of factor that made this guessing number proof cannot decentralized effectively. The hashing power of ASIC is much higher than a usual computer and it also costs much less energy -> hashing power is under control of some ASIC producers. 

Summary

Proof Of Work is a basic proof to decentralized the blockchain to all of the participants effectively. The entry level of this proof is low , thus, anyone has a computer or ASIC could be take part in the network. However, it has a lot of downsides and too difficult to scale up.