Let me start with a little bit of Trivia! The story goes that Nobel Prize-winning physicist Leon Lederman referred to the Higgs as the "Goddamn Particle." The nickname was meant to poke fun at how difficult it was to detect the particle. Once the particle was discovered after many decades of research, the phrase "God Particle" became the headlines printed in bold by most media outlets, across the world and the term stuck. The "God Particle" referred to, was the "Higgs Boson” discovered then. Analogous to this pathbreaking moment in the history of human scientific evolution, another similar pathbreaking moment is happening in the Blockchain world and I refer to it as the “God Protocol”. It is equally disruptive and powerful enough to potentially change the way the world conducts business in decades to come and is the topic of discussion in this article.
Birth of the Bitcoin, Blockchain and the Consensus Mechanism:-
Satoshi Nakamoto (pseudo name) released a paper in 2008, just around the time the Lehman crisis unfolded, which specified the foundations for a peer-to-peer (P2P), decentralized, self-running, self-sustaining technology system for facilitating electronic transactions. The beauty of this was that any two entities unknown to each other could transact, without relying on any “intermediate or central trust authority". Think of it; It was an open-source technology released in 2008 to the outside world, akin to an abandoned child after birth, but slowly but surely looked after by an increasing number of peer to peer network participants, as the guardian, the abandoned child has not only survived but has grown into a toddler with the promise of immense potential for the future. The magical potion if you will, which sustained this motherless abandoned child, is the –“Consensus Protocol” which allowed unknown network entities to transact and evolve in an orderly manner, without any single trusted central parent or central body. Among the many other components of the Protocol, the “Consensus mechanism” is the central, truly disruptive component.
What Is a Consensus Mechanism Protocol?
A Consensus Mechanism or Consensus Protocol or Consensus Algorithm is a method through which all network participants / Peer2Peer nodes reach an agreement on the creation of the next block in the blockchain, made up of a collection of transactions. The consensus mechanism also additionally enables governance of the “state of the network”, including its upgrades & enhancements to enable continuous evolution of the network to meet the ever-changing needs of the network users. The consensus mechanism ensures that each new block added to the blockchain is one and the only truth. Thus the consensus protocol enables to achieve reliability, collaboration, cooperation, fair play to establish Security & Trust between unknown peer network entities. The consensus mechanism is the "God" in the proverb “In God, We Trust” for all the blockchain network participants, thus is referred to here as the “God Protocol”.
Santoshi Nakamoto authored a type of consensus mechanism called the “Proof of Work” in his legendary white paper. Since then there are hundreds of communities working furiously to continue to enhance and evolve the algorithms. All communities strive to find a perfect solution to the Most common problem statement also called the Blockchain Trilemma. The trilemma is like a 3 legged stool, each leg being
- Security (no single node or group of nodes can collude to insert fake transactions)
- Speed (elapsed time for a transaction should be fast enough, as compared to centralized systems of today like Visa/Mastercard/Stock exchange, etc.)
- Decentralization (the most important driver for blockchain is that it is not controlled by a single entity/state/private body).
We will discuss a few examples of various consensus protocol algorithms.
Proof of Work (PoW) is a common consensus algorithm used by the original Bitcoin blockchain and the current Ethereum 1.0 Blockchain network. In this consensus mechanism, all participating Mining network nodes start creating the next block, but only one winner is selected to author/mine the next block. All mining nodes are required to solve a complex mathematical puzzle, thus demonstrating proof of work, but the mining node which solves the puzzle first emerges as the winner and earns the right to add the next block to the blockchain. This mechanism suffers from high energy consumption and longer processing times.
Proof of Stake (PoS) is another most commonly used mechanism, where the mining participant nodes deposit Coins or Stakes demonstrating their skin in the game. Nodes share the responsibility to mine the next block and are rewarded based on their contribution stakes. Any misbehaving node found violating during the validation process is in some form disincentivized, thus maintaining the sanctity of the blockchain network. This type of consensus mechanism uses far less energy than PoW, also increases Speed, but introduces some other drawbacks like coin hoarding, etc. #Ethereum 2.0 will migrate from PoW to PoS with the upcoming upgrade. The #Cardano blockchain is also based on a variation of PoS.
Delegated Proof of stake (DPoS) is another variation, in which voting-based consensus protocol is used to elect a board and the board members have additional rights to mine the block.
Several alternative mechanisms have emerged. Mostly categorized as
1. Consensus protocols based on Effort of Work.
2. Consensus protocols based on the Amount of Resources.
3. Consensus protocols based on Importance, past behavior, or Reputation.
Some examples are:-
Proof of Capacity (PoC) enables sharing of memory or storage space of the contributing nodes on the network. The more memory or storage space a node has, the more its stakes and hence the responsibility and rewards.
Proof of History (PoH) is the one developed by the #Solana network project, and is most complex to understand and explain!.
Proof of Burn (PoB) requires participant nodes to demonstrate their skin-in-the-game by burning coins and taking a short-term loss for a future gain.
Proof of Elapsed Time (PoET): Originally invented by #Intel, it kind of resembles the Local Area Network Media Access CSMA/CD protocol, whereby the nodes start a random wait timer, and the one with the least wait time emerges as the winner to author the next block. This needs some specialized hardware at each node to encode the passage of time cryptographically.
Proof of Authority (PoA): #VeChain the most popular blockchain used for authenticating the supply chain records, uses this protocol. Here as the name suggests specific master nodes are determined by the governing community.
"Gossip protocol": You read it right!. Each node transmits information that it has learned to neighbor nodes, and an overall gossip graph is constructed. To me, this closely resembles the RIP protocol used by early-stage TCP/IP networks, whereby the nodes learn from each other and transmit what they have learned to other neighbors. The #HederaHashgraph blockchain uses this protocol.
If you have read this far, you would have realized that there is an ongoing race amongst technologists, university academia, and crypto venture backers to research the next Ideal Blockchain Consensus Protocol, which is energy efficient, accomplishes Scale, Security and Decentralisation.
I will end this post by summarising, that several variations of the "God Protocol' exists today, albeit in an early stage of usage, but as they say in Philosophy; The search for eternal truth always remains.