From the consensus mechanism to see the future of cryptocurrency
In the world of cryptocurrency, the “consensus mechanism” is the foundation of a public chain, which directly determines the development and success of the public blockchain. From the PoW model of the earliest bitcoin to the PoS mechanism, to the controversial DPoS mechanism, how to build a safe and efficient consensus mechanism to make the project runs stably is becoming the focus of investors pay attention to. Today, the GSC takes everyone to look at the four mainstream consensus mechanisms in the cryptocurrency market and the differences between these mechanisms.
What is the consensus mechanism?
The cryptocurrency is decentralized. The basis of decentralization is that there are many P2P nodes. So what incentives are there to attract users to join the network to become nodes? At the same time, the focus of development is to let multiple nodes maintain a database, then how to decide which node to write? When to write? Once written, how to guarantee that it will not be changed by other nodes (irreversible)? The answer to these questions is the consensus mechanism.
POW-power consensus which was created by Bitcoin
PoW (Proof of Work), the workload proof mechanism, is the first generation of consensus mechanism and the basis of Bitcoin. In short, it is “rewarding by work” you will be paid by how much you work . In the online world, the labor here is the computing service you provide for the network (computing power × duration), the process of providing this service is “mining.”
1. Incentive model encourages multi-participation
Through the constant amount of Bitcoin, the calculation of “mining”, the automatic adjustment of the mining difficulty, and the gradual halving of block rewards, etc., it can attract more people to participate.
2. The “mining” mechanism is relatively fair
This kind of mechanism can attract many users to participate in it. In particular, the earlier the participation, the more the acquisition will lead to the rapid development of the initial stage of cryptocurrency and the rapid expansion of the node network. In the era of CPU mining, Bitcoin attracted a lot of people to participate in “mining”, which is a good proof. It is relatively fair to issue new coins through “mining” and distribute bitcoin to individuals.
The computing power is provided by computer hardware (CPU, GPU, etc.). It consumes electricity and is directly consumed by energy. It is contrary to the concept of human beings pursuing energy conservation, cleanliness and environmental protection.
2. Monopoly power
This mechanism has developed to the present day, users from the personal mining development to large mining pools, mines, concentration of power is becoming more and more obvious. This runs counter to the direction of decentralization, and the security of the network is gradually threatened.
3. Security is getting weaker
The Bitcoin block reward will be halved every four years. When the cost of mining is higher than the mining revenue, people’s enthusiasm for mining is reduced. It is likely that there will be a large amount of computing power which will be reduced. The security of the future Bitcoin network is full of uncertainty. .
PoS — a solution that benefits a few people
PoS (Proof of Stake), the equity certification mechanism, is a system for paying interest based on how much money a user holds and the time (coin age). The most typical example in reality is stocks or bank deposits. If the user wants to get more money, then open the client and keep it online to benefit from “interest” while keeping the network secure.
No need to mine, it will not consume a lot of electricity and energy.
2. More decentralized
Decentralization is relative. Compared to PoW-type cryptocurrencies such as Bitcoin, the cryptocurrency of the PoS mechanism basically doesn’t have too high demand for computer hardware. Everyone can mine (get interest) without worrying about occurrence of the concentration of computing power(single users get 51% of the money through purchase, the cost is higher), the network is more secure and secure.
3. Avoid tightening
The cryptocurrency of the PoW mechanism may lead to deflation due to various reasons such as user loss. However, the cryptocurrency of the PoS mechanism increases the currency at a certain annual interest rate, which can effectively avoid the occurrence of austerity and maintain basic stability.
The cryptocurrency of pure PoS mechanism can only be issued through IPO, which leads to “a few people” (usually developers) getting a lot of cryptocurrency with very low cost. In the face of profits, it is difficult to guarantee that they will not sell in large quantities. The cryptocurrency of the PoS mechanism’s credit basis is not strong enough.
DPoS — a community mechanism that relies on voting governance
DPoS (Delegated Proof of Stake): Authorized Equity Certification Mechanism
For the cryptocurrency of the PoS mechanism, each node can create a block and get “interest” according to the individual’s shareholding ratio. The DPoS is created by a community-trusted trusted account (trustee, here the first 101 nodes with the number of votes) which creats block. In order to become an official trustee, users have to go to the community to canvass and gain the trust of enough users.
The 101 trustees have the same rights to each other. Those who hold cryptocurrencies can change these representatives at any time by voting. As long as they provide unstable computing power, computer downtime, or trying to use their rights to do evil, they will be kicked out of the system by the voters, and the backup representative can always go up.
1. Lower energy consumption
The DPoS mechanism further reduces the number of nodes to 101. Under the premise of ensuring network security, the energy consumption of the entire network is further reduced.
2. Avoid high computing monopoly
For Bitcoin, personal mining is relatively unrealistic. Bitcoin’s computing power is concentrated in the hands of several large mining pools. Each mining pool is centralized. In this perspective, DPoS is like a trustee, so the cryptocurrency of the DPoS mechanism can avoid high computing monopolies like Bitcoin.
3. Faster confirmation speed
The time for each block is 10 seconds, a transaction (after getting 6–10 confirmations) is about 1 minute, and a complete 101 block cycle takes about 16 minutes. Bitcoin (PoW mechanism) takes 10 minutes to generate a block, and takes 1 hour after a transaction is completed (after 6 blocks are confirmed). The Peercoin (PoS mechanism) confirms a transaction will also take about an hour.
1. The voting enthusiasm is not high
The well-known project EOS uses the DPoS mechanism. According to the EOS campaign results, the majority of shareholders (90%) never voted. This is because voting takes time, energy and skills, which is what most investors lack.
2. Pan-democracy causes inferior nodes
The pan-democratic that everyone can vote will result in the inferior quality of the selected nodes, failing to fulfill the responsibilities that the nodes should assume, and causing the entire ecological paralysis. There are many difficulties in dealing with these bad nodes. It is difficult for community elections to prevent them from appearing in a timely and effective manner.
ADPoS — the first effective management model
ADPoS (Account Delegated Proof of Stake), was created by the GSC based on DPoS. In order to meet the needs of high-performance trading, the GSC has made optimization and innovation of the DPoS mechanism. The ADPoS mechanism, created by the community-trusted account (trustee, the top 23 votes) to creat block,meanwhile, there are 50 spare nodes, and the GSC evaluates the value of the account by multi-dimensional value. The high value account will be given more voting rights, and differents from DPoS votes that everyone can votes.
Through SVN (Social Value Unit) social value measurement unit, value evaluation for account number, SVN=PoA+PoC+PoW, PoA (Proof of Activity) effective activity certificate, PoC (Proof of Charm) effective charm certificate, PoW (PoW (Proof of Charm) Proof of Wealth) The proof of effective wealth, the GSC gives the elites more voting rights through such a value assessment mechanism.
The ADPoS mechanism is similar to the Chinese People’s Congress system and the US two-party system. Take the people’s congress system as an example. Each province and city chooses its own representatives through elections, and then these representatives participate in the people’s congress. Such elections are more fair and more efficient.
1. Energy consumption is lower than DPoS
GSC’s ADPoS reduces the number of nodes to 23 (with 50 spare nodes), and 23 high-performance super nodes ensure network operation.
2. The speed of confirm is further improved
In the GSC test network environment, it acieved that creat a block only takes 3 seconds, and one transaction was completed in about 30 seconds. This speed is better than PoW, PoS, DPoS.
3. Higher node quality
Through the SVN model, each account is valued, making the election vote more fair and democratic, so that the elite has more voting rights. The selected nodes have higher quality.
Whether the blockchain project can be achieved is directly related to the future of cryptocurrency. With the market changes, more public chain teams are actively looking for solutions that ensure both safety and efficiency. Voting requires time, effort, and skill. The same to DPoS, the ADPoS mechanism has a problem of low voting enthusiasm. However, compared with the PoW and PoS mechanisms, the ADPoS mechanism maximally balance the fairness and efficiency, and facilitates the large-scale application of blockchain projects. With the development of the blockchain industry in the future, the issue of low voting enthusiasm is also expected to be resolved. The GSC test network was officially launched at the end of August. From the current test situation, the ADPoS mechanism has its advantages, which brings potential for the decentralized application of large-scale landing in the future. Can it meet expectations in the future? let us wait and see!