IEEE Consumer Electronics Magazine - July 2018 - 12
PROOF OF WORK
Proof of work was the first
decentralized consensus protocol
proposed by Nakamoto to achieve
consistency and security in the
bitcoin network.
selected validator nodes, unlike the private blockchain, which
is completely centralized, and the public blockchain, which is
completely decentralized. It is decided by the consortium
whether read or write permissions would be public or limited
to the network participants. Also, the restriction of consensus
to a set of nodes does not guarantee immutability and irreversibility, since control of the consortium by a majority can
lead to tampering with the blockchain.
Proof of work was the first decentralized consensus protocol proposed by Nakamoto to achieve consistency and security in the bitcoin network. In bitcoin, currency transfer
occurs in a completely decentralized fashion, thus requiring a consensus for authentication and block validation.
The nodes in the bitcoin network compete to calculate the
hash value of the next block, which is supposed to be less
than a dynamically varying target value, determined by the
consensus rule. Nodes achieving the solution wait for confirmation by other nodes before adding the block to the
existing blockchain.
More than one valid block might be generated if multiple
nodes find an appropriate solution causing a temporary fork
(branch) in the network. In such scenarios, all of them are
acceptable, and the nodes closer to the miners accept the
solution they receive and forward the same to other peers.
Conflict at a later stage is avoided by accepting the longest
version of the chain available at any time.
CONSENSUS ALGORITHMS
A consensus in a decentralized and distributed network with
distrusted users is the sole and imperative determinant of
the next secure update of their shared state. The following
sections present various approaches to achieve consensus in a
blockchain network, as shown in Figure 7.
PRACTICAL BYZANTINE FAULT TOLERANCE ALGORITHM
The practical Byzantine fault tolerance (PBFT) algorithm was
proposed as a solution to the Byzantine Generals' Problem,
which is about conducting a successful attack on a rival city
by the Byzantine army [11], [12]. For the Byzantine army to
win, all of the loyal generals must work from the same plan
and attack simultaneously. In addition, no matter what the
traitors do, the loyal generals should stick to the decided plan,
as a small number of traitors could ruin the plan.
Similarly, in the blockchain, PBFT works to establish consensus among the participating nodes. The nodes maintain
their current state, and, when a new message is received, the
current state and the message are fed together for computations to help the node reach a decision. This decision is then
broadcast to the network. A majority of the decisions determines the consensus for the network. Hyperledger [13],
which is working on developing consortium blockchain systems for businesses, utilizes PBFT as its underlying consensus mechanism. It should be pointed out that many of the new
developments on blockchain stem from prior work on distributed databases (e.g., [14]-[16]).
Consensus Algorithms
Proof of Work
PBFT
Proof of Stake
FIGURE 7. The consensus approaches in the blockchain.
12 IEEE Consumer Electronics Magazine
^
july 2018
PROOF OF STAKE
Proof of stake was proposed to overcome the disadvantages of
excessive power consumption by proof of work in bitcoin.
Ethereum utilizes proof of stake to achieve consensus. Instead
of investing in resources that can perform rigorous computations for hash calculations in proof of work, proof of stake
proposes to buy cryptocurrency and use it as stake in the network. The stake is directly proportional to the chance of
becoming the block validator. To reach consensus, the block
validator is randomly selected and is not predetermined. The
nodes producing valid blocks get incentives, but, if their block
is not included in the existing chain, they also lose some
amount of their stake. Various consensus models have been
created based upon several factors [17], such as the following:
▼ Type of blockchain: A blockchain network can be permissioned or permissionless.
▼ Transaction rate: The consensus algorithm basically
decides the rate at which transactions are confirmed. In
bitcoin, which employs proof of work, the transaction rate
is only seven transactions/s, because proof of work
requires significant computation time and the block generation time is 10 min.
▼ Scalability: A blockchain system is scalable if it can
achieve consensus with the number of nodes continuously
growing, especially in public blockchain systems.
▼ Participation charges: For some systems, an initial cost
of participation is required. For example, with proof of
stake, nodes invest in the cryptocurrency to express their
interest in the consensus and block validation, whereas
proof of work requires energy input, which is not necessary if you simply want to be part of the network and do
not wish to mine.
▼ Trust condition: This determines whether the nodes contributing are to be trusted and predetermined (as in consortium and private blockchain systems) or unknown (as in
public and proof of work-based blockchains).
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