Proof of Work, Proof of Stake and Proof of Elapsed Time

Proof of Work, Proof of Stake, Proof of Elapsed Time, What is that? In a given blockchain, the blocks are chronologically linked so that no existing transaction can ever be modified or reversed. Chain expansion is unidirectional. Which means that adding new blocks is the only way to update a blockchain. In public networks, any node can become eligible to participate in the creation of new blocks. It is the job of consensus algorithm to decide which nodes become "miners" or validators.

The consensus mechanism is imperative. It protects the system from malicious nodes that might intentionally violate predefined rules or attempt to conduct fake transactions or stage Distributed Denial of Service (DDoS) attacks. To understand this mechanism, we must understand these three: Proof of Work, Proof of Stake, Proof of Elapsed Time.

In this article I show you the difference between Proof of Work, Proof of Stake, Proof of Elapsed Time. But first, here crypto-Jackpot training which allows you to get rich with cryptocurrencies.

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What is Proof of Work or Proof of work?

Decentralization was a key part of the initial vision for cryptocurrencies. To achieve this, a way had to be found to confirm transactions without the intervention of financial institutions. The first solution to this challenge was called proof of work or Proof of Work.

La Proof of WorkPoW) is a form of adding new transaction blocks to a cryptocurrency's blockchain. The job, in this case, is to generate a hash that matches the target hash for the current block. The successful cryptocurrency miner earns the right to add that block to the blockchain and receive rewards.

Each cryptocurrency owns or evolves in a blockchain, which is a public register composed of blocks of transactions. With cryptocurrencies of type “proof-of-work“, each block of transactions has a specific hash. For the block to be confirmed, a cryptocurrency miner must generate a target hash that is less than or equal to that of the block.

To do this, miners use mining devices that quickly generate calculations. The goal is to be the first miner to get the target hash, as they are the ones who can update the blockchain and receive cryptocurrency rewards.

If proof of work works well in cryptocurrencies, this is because it is difficult to find the target hash, but not to verify it. The process is difficult enough to prevent manipulation of transaction records. At the same time, once a target hash is found, it is easy for other miners to verify it.

Sample Proof of Work

Here is an example of how Bitcoin uses proof of work to maintain the integrity of its blockchain.

When Bitcoin transactions take place, they go through a security check and are bundled into a block to be mined. Bitcoin's proof-of-work algorithm then generates a hash for the block. The algorithm used by Bitcoin is called SHA-256, and it always generates 64-character hashes.

Miners race to be the first to generate a target hash that is lower than the block hash. The winner can add the last block of transactions to the Bitcoin blockchain. He also receives bitcoin rewards in the form of newly minted coins and transaction fees. The maximum bitcoin supply is set at 21 millions of pieces, but, beyond that, miners will continue to receive transaction fees for their service.

The proof-of-work algorithm used by Bitcoin aims to add a new block every 10 minutes. It does this by adjusting the difficulty of bitcoin mining based on how fast miners add blocks. If mining is too fast, hash calculations become more difficult. If it goes too slowly, they become easier.

What is Prof of Stake or Proof of Stake?

Ethereum developers understood early on that proof-of-work would present scalability limits that would eventually need to be overcome – and indeed, as protocols for decentralized finance (or DeFi) powered by Ethereum have grown in popularity, the blockchain has struggled to keep up, leading to higher fees.

Prof of Stake (PoS) has emerged as an alternative to PoW. Despite bitcoin's initial success, PoW could not meet the demand for higher throughput, with later blockchains demanding greater scalability and faster transaction rates.

Additionally, PoW systems end up requiring massive amounts of energy for the computing power used by miners. The PoS algorithm was first presented in 2011 on Bitcointalk. Peercoin was the first to adopt it in combination with PoW, but the consensus algorithm quickly spread in all its variants.

Unlike PoW networks that rely on miners, PoS-powered blockchains are maintained by validators. The validation process in PoS is called “forging“. If a node wishes to participate in the block creation process, all it needs to do is stake the native token. There is no need to spend electricity or buy specialized equipment.

What are the differences between Prof of Work and Prof of Stake

Power consumption is one of the main differences between the two consensus mechanisms. Since blockchains in Prof of Stake do not require miners to expend electricity on redundant processes (competing to solve the same puzzle), Prof of Stake allows networks to operate with significantly less resource consumption. lower.

Both consensus mechanisms have economic consequences that penalize network disruptions and thwart malicious actors. In the case of proof of work, the penalty for miners who submit invalid information or blocks is the sunk cost of computing power, energy, and time.

Bearing in the case of the prof of stake, crypto funds staked by validators serve as an economic incentive to act in the interest of the network. In case a validator accepts a bad block, part of the funds he has staked will be “cut off” as a penalty. The amount a validator can be discounted depends on the network.

What is Proof of Elapsed Time?

Also known as PoET, this consensus is anything but poetry! The algorithm is mainly used in permissioned blockchains like Hyperledger. PoET uses lottery-like random selection to select which node will win the new block.

PoET started to be used in Hyperledger Sawtooth in 2016/2017, introduced by Intel. THE " Minors » must first join the network, obtaining a membership certificate. Once they are in the network, the nodes have to wait for a certain amount of time which is decided randomly. The miner must wait at least the set time before starting to mine a new block in the blockchain.

In PoET, the miner with the least amount of time is elected to do block mining that round. The system tends to be fair and chooses miners with a good degree of randomness. It does not consume much electricity and miners can “ fall asleep » while waiting for their turn.

POeT is based on special processors developed by Intel called SGX – Software Guard Extensions. SGX allows logical separation of CPU memory which cannot be accessed or modified. These parts are also called enclaves and can perform isolated commands and memory encryption.

Only enclaves can access and modify stored in this compartment. The code is encrypted and cannot be accessed outside the enclave. Which makes it very secure for processes taking place inside the enclave.

In conclusion

The POeT mechanism generates a random wait time for the miner, and the miner gets the signed timer from the SGX trust code. After waiting for the time to pass, the minor receives a certificate stating that he has waited the necessary time. Once the block is mined, the miner broadcasts the block with the certificate. Depending on how the blockchain was designed, the miner may or may not receive a reward for the work.

This is what you need to know about the transaction verification and confirmation mechanisms in a blockchain. But before you leave, here's a complete drop shipping training you can buy.